DCT
2:25-cv-00120
Alpha Modus Corp v. Walgreen Co
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Alpha Modus, Corp. (Florida)
- Defendant: Walgreen, Co. (Illinois)
- Plaintiff’s Counsel: Dickinson Wright PLLC
- Case Identification: 2:25-cv-00120, E.D. Tex., 04/23/2025
- Venue Allegations: Plaintiff alleges venue is proper because Walgreens is registered to do business in Texas, has committed acts of infringement in the Eastern District of Texas, and operates regular and established places of business in the District, including a specific store location in Marshall, Texas. The complaint also notes that Walgreens has previously consented to venue in the district in prior litigation.
- Core Dispute: Plaintiff alleges that Defendant’s in-store digital smart screens, provided by Cooler Screens, infringe two patents related to real-time, in-store customer analytics, marketing, and inventory management.
- Technical Context: The technology at issue addresses the challenge for brick-and-mortar retailers to compete with online stores by using in-store sensors, cameras, and displays to analyze customer behavior and provide dynamic, personalized advertising and promotions at the point of purchase.
- Key Procedural History: The complaint alleges that Plaintiff engaged with Cooler Screens, Defendant’s partner and a company co-founded by a former Walgreens CEO, regarding potential licensing of the Patents-in-Suit in January 2020. Plaintiff further alleges it sent a notice letter directly to Walgreens in February 2020, followed by additional letters in 2023, all of which were allegedly ignored. The complaint also notes that Plaintiff has licensed the technology to other companies, including GZ6G Technologies Corp.
Case Timeline
| Date | Event |
|---|---|
| 2013-07-19 | Priority Date for ’672 and ’890 Patents |
| 2020-01-01 | Alpha Modus allegedly discusses licensing with Cooler Screens |
| 2020-02-01 | Alpha Modus allegedly sends first notice letter to Walgreens |
| 2021-04-13 | ’672 Patent Issued |
| 2021-06-22 | ’890 Patent Issued |
| 2023-07-01 | Alpha Modus allegedly sends follow-up notice letter to Walgreens |
| 2023-08-01 | Alpha Modus allegedly sends second follow-up notice letter |
| 2024-01-11 | Alpha Modus licenses patents to GZ6G Technologies Corp. |
| 2024-04-16 | Alpha Modus licenses patents to Xalles Holdings/CashXAI |
| 2025-04-23 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,977,672 - "Method And System For Real-Time Inventory Management, Marketing, And Advertising In A Retail Store," issued April 13, 2021.
The Invention Explained
- Problem Addressed: The patent addresses the challenge brick-and-mortar retailers face from online competitors and the phenomenon of "showrooming," where customers inspect products in-store but purchase them online (Compl. ¶28). These retailers lacked the ability to provide the real-time, personalized customer experiences common in e-commerce (Compl. ¶29).
- The Patented Solution: The invention is a system for use in a retail store that employs servers and monitoring devices, such as cameras, at a product display (Compl. ¶31). The system uses image recognition to identify product inventory, displays product and pricing information on a screen, and analyzes real-time customer data to generate targeted promotions based on "behavioral analytics" (Compl. ¶32). The system architecture is depicted in a diagram, which shows in-store cameras and displays connected to a server and a cloud network ('672 Patent, Fig. 1).
- Technical Importance: The technology purports to bring the data-driven advantages of online retail into the physical store, enabling dynamic marketing and inventory management to influence purchasing decisions at the critical moment of consideration (Compl. ¶30).
Key Claims at a Glance
- The complaint asserts independent Claim 1 (Compl. ¶61, ¶63).
- Claim 1 of the ’672 Patent requires a system with a server that executes instructions to perform the following steps:
- Identify an inventory of retail products at a display location using image recognition.
- Display information about those products on a visual display.
- Determine in real-time the current pricing for the products.
- Display the current pricing on the visual display.
- Receive real-time data of a customer using information monitoring devices.
- Generate a promotion for the customer based on behavioral analytics (Compl. ¶32).
- The complaint reserves the right to assert other claims, including dependent claims (Compl. ¶73).
U.S. Patent No. 11,042,890 - "Method And System For Customer Assistance In A Retail Store," issued June 22, 2021.
The Invention Explained
- Problem Addressed: The patent recognizes the need for brick-and-mortar retailers to adapt to consumer behavior influenced by digital technology by providing more targeted, real-time assistance and an enhanced shopping experience (Compl. ¶39).
- The Patented Solution: The invention is a method that uses "information monitoring devices" to analyze customer interactions with products (Compl. ¶41). Specifically, it gathers "object identification information" to know what product a customer is interested in, and "sentiment information" to understand the customer's reaction to it ('890 Patent, col. 21:54-58). This combined information is analyzed in real-time to manage inventory and provide a targeted response, such as displaying marketing information or offering a coupon (Compl. ¶42). The complaint includes an image illustrating the capture of demographic and sentiment data via facial analysis (Compl. p. 9, FIG. 2).
- Technical Importance: The invention aims to advance beyond simple product identification by incorporating analysis of a customer's emotional reaction ("sentiment"), allowing for more nuanced and potentially more effective personalized marketing responses (Compl. ¶40).
Key Claims at a Glance
- The complaint asserts independent Claim 1 (Compl. ¶85, ¶88).
- Claim 1 of the ’890 Patent requires a method comprising the steps of:
- Using information monitoring devices to gather information about a person at a retail store, which includes (A) gathering object identification information of a product of interest, and (B) gathering sentiment information of the person with respect to that product.
- Analyzing the gathered information in real time to manage inventory.
- Providing a real-time response based on the analyzed information, where the response is selected from a group including communications, displays, or coupons (Compl. ¶42).
- The complaint reserves the right to assert other claims, including dependent claims (Compl. ¶98).
III. The Accused Instrumentality
Product Identification
The "Accused Products" are the "digital smart screens" and associated systems that Defendant Walgreens implemented in its stores in partnership with a company called Cooler Screens (Compl. ¶44, ¶51).
Functionality and Market Context
The complaint alleges that the Accused Products constitute a system for real-time inventory management, marketing, and advertising, as well as a method for customer assistance (Compl. ¶60, ¶84). The functionality is alleged to include using image recognition to identify inventory, displaying product and price information, receiving real-time customer data, and generating promotions based on behavioral analytics (Compl. ¶62). The complaint further alleges these systems analyze object and sentiment information to provide targeted responses like marketing or coupons (Compl. ¶¶86-87). The complaint includes a system diagram, labeled FIG. 1, depicting a retail store environment with cameras, displays, and servers connected to a cloud network (Compl. p. 6). The complaint alleges that Walgreens is one of the largest pharmacy chains in the U.S. and that its use of the accused technology has significantly contributed to its retail efficiency and profitability (Compl. ¶43, ¶53).
IV. Analysis of Infringement Allegations
10,977,672 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| (A) identify, via image recognition, an inventory of one or more retail products physically located at the first visual display location... | The Accused Products allegedly perform functions including "identifying, via image recognition, an inventory of retail products physically located at a display location in the store." The complaint provides an image illustrating customer facial analysis (FIG. 2), suggesting camera use. | ¶62, p. 6 | col. 12:5-14 |
| (B) display, on the first visual display, information about one or more of the one or more retail products... | The Accused Products allegedly "displaying information about the products." | ¶62 | col. 13:1-5 |
| (C) determine, in real-time, current pricing information... | The Accused Products allegedly perform "determining... current pricing information." | ¶62 | col. 12:55-65 |
| (D) display, on the first visual display, the current pricing information... | The Accused Products allegedly perform "displaying current pricing information." | ¶62 | col. 12:55-65 |
| (E) receive, using one or more information monitoring devices at the first visual display location, real-time data of a customer... | The Accused Products allegedly perform "receiving real-time data of a customer using one or more information monitoring devices." | ¶62 | col. 10:14-16 |
| (F) generate a promotion of one or more of the one or more retail products... for the customer based on behavioral analytics. | The Accused Products allegedly perform "generating promotions for the customer based on behavioral analytics." | ¶62 | col. 13:54-62 |
11,042,890 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| (a) using one or more information monitoring devices to gather information about a person... comprises (A) gathering object identification information of a product... and (B) gathering sentiment information of the person... | The Accused Products allegedly "include the use of one or more information monitoring devices to gather information about a person at a retail store" and "perform functions such as gathering object identification information of a product and gathering sentiment information of the person with respect to the product." The complaint includes an image, labeled FIG. 2, illustrating facial recognition technology being used to determine a customer's sentiment (e.g., 'Happy: 0.785') (Compl. p. 9). | ¶85, ¶86, p. 9 | col. 9:56-61 |
| (b) analyzing the information in real time... to manage inventory of the products... | The Accused Products allegedly "analyze the information in real time." The complaint also alleges the underlying system is for "real-time inventory management" (Compl. ¶60). | ¶87 | col. 4:6-8 |
| (c) providing a response in real time based upon the analyzed information... wherein the response is selected from a group consisting of... [communications, engagement, coupons, etc.] | The Accused Products allegedly "provide a response based upon the analyzed information gathered... including but not limited to directing a person to a product location, engaging the person based on the product, providing marketing or advertising information, and offering coupons." | ¶87 | col. 4:42-59 |
Identified Points of Contention
- Evidentiary Questions: The complaint's infringement allegations are highly conclusory, largely mirroring the language of the asserted claims (Compl. ¶62, ¶¶86-87). A primary point of contention will be the factual and evidentiary basis for these allegations. What evidence does Plaintiff have that the Accused Products actually perform the specific functions of (1) "identify[ing], via image recognition, an inventory," and (2) gathering "sentiment information" of a customer, as opposed to simply displaying pre-programmed or looping advertisements?
- Scope Questions: The case may involve disputes over the scope of key claim terms. For the ’890 Patent, a question is whether the term "sentiment information" requires the direct emotion-detecting facial analysis shown in the patent's preferred embodiment (e.g., FIG. 2), or if it can be read more broadly to cover simpler behavioral metrics like dwell time. For the ’672 Patent, the scope of "behavioral analytics" will be at issue, raising the question of whether the accused system's logic for generating promotions rises to the level of "analytics" as described in the patent, or if it is a simpler, non-infringing rules-based system.
V. Key Claim Terms for Construction
Term: "behavioral analytics" (’672 Patent, Claim 1)
- Context and Importance: The generation of a promotion must be "based on behavioral analytics." The definition of this term is therefore dispositive for infringement of this limitation. Practitioners may focus on this term to determine if the accused system’s promotional logic is sufficiently sophisticated to meet the claim's requirement.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent specification describes using "demographic and sentiment information" to "optimize messaging" (e.g., ’571 Patent, col. 13:54-65), which a plaintiff might argue supports a broad definition covering any rule-based connection between observed customer data and a resulting promotion.
- Evidence for a Narrower Interpretation: The specification also describes using "machine learning algorithms to autonomously determine the optimal message to display to each customer" (’571 Patent, col. 14:27-31). A defendant may argue this language limits "analytics" to a more complex, self-learning system, not a simple pre-programmed one.
Term: "sentiment information" (’890 Patent, Claim 1)
- Context and Importance: The gathering of "sentiment information" is a core, distinguishing feature of the claimed method. Whether the accused system gathers data that falls within this definition is critical to the infringement analysis.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The term itself is not explicitly defined or limited in the claims. A plaintiff could argue it covers any data reflecting a customer's state of mind or reaction, including inferences from non-facial data like product interaction time or movement patterns.
- Evidence for a Narrower Interpretation: The specification’s primary and most detailed embodiment of gathering sentiment is through facial analysis that determines metrics for "Happy," "Sad," "Anger," etc. ('571 Patent, Fig. 2; col. 9:58-61). A defendant will likely argue that this explicit disclosure limits the term's scope to this type of emotion-detecting functionality.
VI. Other Allegations
Indirect Infringement
The complaint alleges induced infringement for both patents. It alleges Walgreens had knowledge of the patents as of February 2020 via a direct notice letter, as well as through its partnership with Cooler Screens, whose leadership was allegedly informed of the patents (Compl. ¶¶54, 74, 99). The complaint alleges Walgreens demonstrated specific intent to induce by using the Accused Products and encouraging its customers and staff to use them in a manner consistent with its own "promotions and instructions" (Compl. ¶¶76, 78, 101, 103).
Willful Infringement
Willfulness is alleged for both patents. The factual basis is the same as for inducement: alleged pre-suit knowledge from the February 2020 notice letter and the communications with Cooler Screens, after which Walgreens allegedly continued its infringing activities with "blatant disregard" for Plaintiff’s patent rights (Compl. ¶¶67-68, 92-93).
VII. Analyst’s Conclusion: Key Questions for the Case
- An Evidentiary Question of Technical Operation: The core of the direct infringement case will depend on a key evidentiary question: What proof can be presented that the accused "Cooler Screens" technology actually performs the sophisticated, real-time analysis claimed in the patents? The dispute will likely move beyond marketing language to a technical examination of whether the accused systems are merely passive displays or if they truly execute functions like image-based inventory management and the gathering of customer "sentiment information."
- A Definitional Question of Claim Scope: The outcome will likely be shaped by claim construction, specifically the interpretation of "sentiment information" (’890 Patent) and "behavioral analytics" (’672 Patent). A central issue for the court will be whether "sentiment" requires the specific emotion-detecting facial recognition heavily featured in the patent's disclosure, or if it can encompass simpler metrics, a distinction that could prove dispositive.
- A Factual Question of Knowledge and Intent: Given the allegations of a 2020 notice letter to Walgreens and discussions with its technology partner, a crucial question will be one of willfulness. The court will need to examine the facts surrounding this alleged pre-suit knowledge to determine if Walgreens' conduct constitutes the "reckless" or "deliberate" behavior required for enhanced damages.