DCT

2:26-cv-00024

Wolverine Barcode IP LLC v. Sam's West Inc

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Key Events
Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:26-cv-00024, E.D. Tex., 01/09/2026
  • Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant has a regular and established place of business in the district and has committed alleged acts of infringement there.
  • Core Dispute: Plaintiff alleges that Defendant’s systems for conducting offline commercial transactions using barcodes for personal identification infringe a patent related to methods for such transactions.
  • Technical Context: The technology at issue involves using barcodes, such as those displayed on a mobile phone, as a user identifier to facilitate in-store payments, particularly for low-cost "micro-payment" level goods.
  • Key Procedural History: The complaint states that Plaintiff is a non-practicing entity and that it and its predecessors-in-interest have entered into prior settlement licenses. Plaintiff preemptively addresses potential patent marking defense issues under 35 U.S.C. § 287(a) by arguing that its licensees did not produce a "patented article" and that, if necessary, it will limit its claims to asserted method claims, for which marking requirements do not apply.

Case Timeline

Date Event
2010-09-21 ’689 Patent Priority Date
2016-03-08 U.S. Patent No. 9,280,689 Issued
2026-01-09 Complaint Filed

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

U.S. Patent No. 9,280,689 - *Method and Apparatus for Conducting Offline Commerce Transactions*

The Invention Explained

  • Problem Addressed: The patent’s background section describes the high processing costs that make conventional credit cards impractical for "micro payment" transactions (e.g., items costing a few cents). It also notes that alternative technologies like RFID or NFC require specialized readers that are not widely available at vendor sites, unlike the ubiquitous barcode scanners found at nearly all cash registers. (’689 Patent, col. 1:23-30, col. 2:47-51).
  • The Patented Solution: The invention proposes a system where a unique user identifier, such as a cell phone number or credit card number, is converted into a "User ID Barcode." This barcode is distinguished from product barcodes by prefixing the underlying number with a "special character." A user presents this barcode (e.g., on a cell phone screen) at checkout, and a standard scanner captures it. The transaction is then processed by a central "User Vendor Management Server" (UVM) against a pre-funded or credit-based user account, bypassing conventional credit card processing networks. (’689 Patent, Abstract; col. 3:15-24; Fig. 1(b)).
  • Technical Importance: This approach was designed to leverage existing and widespread point-of-sale hardware (barcode scanners) to enable low-cost, secure digital payments for small-value transactions. (’689 Patent, col. 2:47-51, col. 7:1-5).

Key Claims at a Glance

  • The complaint asserts infringement of claims 1-3 of the ’689 Patent (Compl. ¶8). Independent claim 1 is directed to a method with the following essential elements:
    • Providing a personal code to a person.
    • Converting the personal code into a "User ID Barcode" that includes at least one "special character" to distinguish it from a product barcode.
    • Storing the personal code in the User ID Barcode format and also in a User Vendor Management Server.
    • Establishing a User Account in the server corresponding to the personal code.
    • Depositing funds into the User Account to establish a credit limit.
    • Conducting purchases by scanning product barcodes and the User ID Barcode.
    • Detecting the User ID Barcode at a vendor server and forwarding the barcode and purchase price to the User Vendor Management Server.
    • Comparing the purchase price with the funds in the User Account to determine if funds are available.
    • Sending an approval signal to the vendor server and then to the cash register if funds are sufficient.
    • Repeating the purchasing steps for subsequent transactions.
  • The complaint does not explicitly reserve the right to assert dependent claims, but infringement allegations are made as to claims 1-3 (Compl. ¶8).

III. The Accused Instrumentality

Product Identification

  • The complaint does not name a specific product or service (e.g., "Scan & Go"). It broadly accuses "systems, products, and services that conducting offline transactions that use a barcode as a method of personal identification" that are maintained, operated, and administered by Defendant Sam’s West, Inc. (Compl. ¶8).

Functionality and Market Context

  • The complaint alleges that Defendant's accused instrumentalities perform infringing methods by using a barcode for personal identification during offline transactions (Compl. ¶¶7-8). The complaint does not provide further technical detail on how the accused systems operate. It alleges that Defendant put the claimed inventions "into service" and derives "monetary and commercial benefit from it" (Compl. ¶8).
  • No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references a claim chart in an "Exhibit B" that was not included with the filed document (Compl. ¶9). Therefore, a detailed element-by-element analysis based on the complaint's specific allegations is not possible. The complaint's narrative infringement theory is that Defendant's systems for conducting offline transactions using a barcode for personal identification practice one or more of claims 1-3 of the ’689 patent (Compl. ¶8).

  • Identified Points of Contention: Based on the language of the asserted claims and the general nature of modern retail payment systems, several technical and legal questions may arise.
    • Scope Questions: A central question may be whether the barcode used in Defendant’s system constitutes a "User ID Barcode" as defined in the patent. Specifically, does it include a "special character" for the express purpose of distinguishing it from product barcodes, as required by claim 1? (’689 Patent, col. 18:1-5).
    • Technical Questions: The infringement analysis may turn on the architecture of Defendant's payment processing system. For instance, does the system operate on a pre-paid basis that involves "depositing funds in said User Account" (as required by claim 1(e)), or does it function as a pass-through to a customer's pre-existing credit or debit card for real-time authorization? The complaint does not provide evidence to resolve this question.

V. Key Claim Terms for Construction

  • The Term: "depositing funds in said User Account to establish a credit limit" (from claim 1(e)).

  • Context and Importance: This term appears critical to defining the nature of the required user account. The infringement case against a modern retail payment system, which typically links directly to a user's credit card, may depend on whether this "depositing funds" limitation can be read to cover such a linkage, or if it requires a distinct, pre-funded "stored value" account.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent discusses both a "prepaid mode" where a user deposits a "Top Off amount" and a "post pay mode" with a pre-determined "Negative Top Off amount" as a credit limit. (’689 Patent, col. 3:33-57). An argument could be made that the "credit limit" language in the claim is broad enough to encompass the post-pay embodiment described in the specification, even if the "depositing funds" language appears more aligned with the prepaid mode.
    • Evidence for a Narrower Interpretation: The plain language of claim 1(e) recites "depositing funds," which more naturally describes a pre-paid system where money is transferred into an account before a transaction. The detailed description of the pre-paid mode explicitly links the "Top Off amount" deposit to the available funds. (’689 Patent, col. 14:7-14). This could support a narrower construction limited to accounts that are actively funded by the user prior to or during a purchase.

  • The Term: "special character" (from claim 1(b)).

  • Context and Importance: The patent repeatedly emphasizes that this "special character" is what allows the system to distinguish a user's barcode from a product barcode. Practitioners may focus on this term because if the accused system uses a barcode format (like a QR code) that is inherently distinguishable from a product UPC code without needing a specific, added "special character," it may not meet this limitation.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent states that the character is required "so that the system can distinguish the User ID Barcode from the product data barcode" (’689 Patent, col. 3:19-22). This functional language could support an interpretation where any feature of the barcode that performs this distinguishing function, even if it is an inherent property of the barcode's format, could be considered a "special character."
    • Evidence for a Narrower Interpretation: The specification explicitly describes the special character as a prefix or suffix, giving "?" as an example. (’689 Patent, col. 3:15-18; col. 6:10-12). This suggests the inventor contemplated a specific character added to a string of data (like a phone number) before it is converted into a barcode, not merely a different type of barcode format.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges both induced and contributory infringement. It asserts Defendant actively encourages and instructs customers on how to use its products and services in an infringing manner and that there are no substantial non-infringing uses for these products and services. (Compl. ¶¶10-11).
  • Willful Infringement: The complaint alleges Defendant has known of the ’689 Patent and the underlying technology "from at least the filing date of the lawsuit" and reserves the right to amend if pre-suit knowledge is discovered. This forms the basis for a claim of post-filing willful infringement. (Compl. ¶¶10-11, fns. 1-2; Prayer for Relief ¶e).

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

This case appears to present fundamental questions of technical and definitional alignment between the patent's specific claims and the functionality of a modern retail payment system. The resolution will likely depend on the following key issues:

  • A core issue will be one of system equivalence: Does the accused Sam's West payment system operate using the specific pre-paid or post-paid account architecture described in the patent, particularly the step of "depositing funds," or does it utilize a fundamentally different pass-through credit card authorization model that falls outside the claim scope?
  • A second key question will be one of definitional scope: Can the term "special character," which the patent describes as a prefix like "?", be construed to cover modern barcode formats (e.g., QR codes) that are structurally distinct from product UPCs, or is there a dispositive mismatch between the claimed method of distinguishing barcodes and the method used in the accused system?
  • An underlying evidentiary question will be whether discovery reveals that the accused system's software and network architecture map onto the patent's "User Vendor Management Server" model, which is designed to bypass conventional credit card processing networks for cost savings.