Arbor Systems LLC v. Iotex Technology

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Arbor Systems LLC (New Mexico)
  • Defendant: IoTeX Technology (British Virgin Islands)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 2:26-cv-00046, E.D. Tex., 01/22/2026
• Venue Allegations: Venue is alleged to be proper because the Defendant is a foreign corporation, and the complaint asserts that acts of patent infringement occurred within the district.
• Core Dispute: Plaintiff alleges that Defendant’s products, which operate in the Internet of Things (IoT) and blockchain space, infringe a patent related to smart devices that utilize blockchain smart contracts for secure operation.
• Technical Context: The technology resides at the intersection of IoT devices and distributed ledger technology, purporting to use blockchain smart contracts to manage secure interactions and transactions between devices.
• Key Procedural History: The complaint is the initial pleading in this matter. The patent-in-suit is a continuation of a prior application, now issued as U.S. Patent No. 10,046,228. No other significant procedural events are mentioned in the complaint.

Case Timeline

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

• Patent Identification: U.S. Patent No. 10,195,513, titled "Smart device", issued on February 5, 2019 (the "’513 Patent").

U.S. Patent No. 10,195,513 - "Smart device"

The Invention Explained

• Problem Addressed: The patent’s background section identifies parallel trends in technology: the proliferation of smart Internet of Things (IoT) devices and the challenges posed by the massive data volumes they generate, as well as the security risks of "fraudulent and harmful activities arising from hacked IOT devices" (’513 Patent, col. 1:12-18).
• The Patented Solution: The invention is an IoT device comprising a processor, sensor, and wireless transceiver that uses blockchain smart contracts to "facilitate secure operation" (’513 Patent, Abstract). The system is described as enabling IoT devices to securely communicate and engage in peer-to-peer transactions, manage supply chains, and enforce agreements using blockchain-based smart contracts, thereby providing a framework for secure, decentralized device interaction (’513 Patent, col. 5:1-29; FIG. 2A).
• Technical Importance: This technical approach seeks to address significant security and data management challenges in the rapidly expanding IoT market by leveraging the decentralized and secure nature of blockchain technology (’513 Patent, col. 1:12-18).

Key Claims at a Glance

• The complaint asserts infringement of "one or more claims" but does not specify which claims are at issue, instead referring to "Exemplary '513 Patent Claims" in a non-proffered exhibit (Compl. ¶¶11, 16). Independent Claim 1 is representative of the patent's core inventive concept.
• Independent Claim 1 Elements:
  • An Internet of Things (IOT) device, comprising:
  • a processor;
  • a sensor coupled to the processor;
  • a transceiver; and
  • a module for processing a smart contract in a blockchain with the blockchain address, the processor storing tamperproof events on the blockchain or a side chain, the processor executing terms of the smart contract and a module for forming a contract between the processor and another machine.
• The complaint's generalized allegations suggest it reserves the right to assert other independent and dependent claims (’513 Patent, col. 96:8-132:20; Compl. ¶11).

III. The Accused Instrumentality

Product Identification

• The complaint does not specifically name any accused products or services (Compl. ¶11). It refers generally to "Exemplary Defendant Products" that are purportedly identified and analyzed in an incorporated "Exhibit 2" which was not provided with the complaint (Compl. ¶¶11, 16).

Functionality and Market Context

• The complaint does not provide sufficient detail for analysis of the accused instrumentality's specific functionality, features, or market position (Compl. ¶¶11-17).

IV. Analysis of Infringement Allegations

The complaint alleges that the Defendant's "Exemplary Defendant Products" directly infringe the ’513 Patent because they "practice the technology claimed" and "satisfy all elements" of the asserted claims (Compl. ¶16). The complaint states that infringement allegations are detailed in claim charts provided in Exhibit 2; however, this exhibit is not included in the provided court filing (Compl. ¶¶16-17). The narrative theory of infringement is that the Defendant's products, by being made, used, or sold, embody the claimed invention (Compl. ¶11). No probative visual evidence provided in complaint.

Identified Points of Contention

Due to the lack of specific factual allegations regarding the accused products, a direct technical comparison is not possible. However, based on the language of Claim 1, future disputes may raise questions such as:

• Scope Questions: Whether the Defendant’s accused system, which may be software- or server-based, constitutes an "Internet of Things (IOT) device" within the meaning of the claims, which are supported by embodiments of physical hardware like sports equipment and wearables (’513 Patent, FIGs. 7-12B).
• Technical Questions: What evidence demonstrates that the accused products contain a "module for processing a smart contract" that performs the claimed functions of storing events, executing terms, and forming contracts on a blockchain, as distinct from general-purpose data processing or communication functions (’513 Patent, col. 96:13-20).

V. Key Claim Terms for Construction

The Term: "module for processing a smart contract in a blockchain"

• Context and Importance: This term appears to be central to the asserted claims and captures the core novelty of integrating smart contracts with IoT devices. Practitioners may focus on this term because its construction will likely determine whether a wide range of automated, blockchain-based transactions fall within the claim scope.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification describes a wide array of blockchain operations that could be considered "processing a smart contract," including peer-to-peer transactions, supply chain management, and executing insurance policies, suggesting the term is not limited to a single type of contract (’513 Patent, col. 5:1-29; col. 19:5-20:51).
  • Evidence for a Narrower Interpretation: The patent provides detailed visual examples of smart contracts with specific user interfaces and nested logical structures, such as an "Ethereum smart contract" for a website sale (FIG. 13B) and a complex insurance policy (FIG. 13C). This could support a narrower definition requiring a formal, multi-term agreement rather than any simple blockchain transaction.

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement, stating that the Defendant sells its products and distributes "product literature and website materials inducing end users" to operate the products in an infringing manner (Compl. ¶¶14, 15).
• Willful Infringement: The complaint does not contain an explicit count for willful infringement. However, it alleges "Actual Knowledge of Infringement" based on the service of the complaint itself, which may form the basis for a future claim of post-filing willfulness or a request for enhanced damages (Compl. ¶13). The prayer for relief also requests that the case be declared "exceptional" under 35 U.S.C. § 285 (Compl. p. 5).

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

• A primary issue will be one of pleading sufficiency and evidence: Given the complaint’s lack of specific factual allegations, a key initial question is whether the plaintiff can provide sufficient technical evidence to plausibly demonstrate that any specific product made by the Defendant practices the functions recited in the asserted claims, particularly the processing of smart contracts on a blockchain.
• The case will also likely turn on a question of definitional scope: How will the court construe the term "module for processing a smart contract"? Whether this term is interpreted broadly to encompass a wide range of automated blockchain interactions or narrowly to require the more complex, programmatic agreement structures shown in the specification could be determinative for the infringement analysis.