DCT
3:23-cv-00068
Alvao Digital LLC v. AXS Group LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Alvao Digital, LLC (Florida)
- Defendant: AXS Group, LLC and AXS Digital, LLC (Delaware)
- Plaintiff’s Counsel: Garteiser Honea, PLLC
- Case Identification: 3:23-cv-68, N.D. Tex., 01/10/2023
- Venue Allegations: The complaint alleges venue is proper in the Eastern District of Texas based on Defendants maintaining a regular and established business presence in that district.
- Core Dispute: Plaintiff alleges that Defendants’ AXS event ticketing platform infringes two patents related to methods and systems for selling tickets for a portion of an event after it has already commenced.
- Technical Context: The technology operates in the electronic ticketing industry, aiming to create a secondary market for the residual value of partially used or unused tickets for live events.
- Key Procedural History: The '918' Patent is a continuation of the application that led to the '717' Patent. The complaint notes that the '717 Patent has expired and that damages are sought for past infringement within the statutory period. The complaint also preemptively asserts the validity and patent eligibility of the asserted patents, noting they have been cited as prior art in patent applications by other technology companies.
Case Timeline
| Date | Event |
|---|---|
| 2000-11-06 | Priority Date for '717 and '918 Patents |
| 2011-03-01 | Issue Date for U.S. Patent No. 7,899,717 |
| 2019-01-22 | Issue Date for U.S. Patent No. 10,185,918 |
| 2022-09-10 | Example Accused Activity Date (per complaint screenshots) |
| 2023-01-10 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,899,717 - “Apparatus and Method for Selling a Ticket to an Event and/or to a Portion of an Event or Venue,” Issued March 1, 2011
The Invention Explained
- Problem Addressed: The patent identifies the economic problem of lost value when ticket holders cannot use their tickets for an entire event (e.g., season ticket holders missing a game or attendees leaving a concert early) ('717 Patent, col. 1:30-44). The prior art allegedly lacked a mechanism for ticket holders to "recoup revenues for unused tickets and/or tickets which are only utilized for a portion of an event" ('717 Patent, col. 1:57-60).
- The Patented Solution: The invention describes a computer-implemented system centered on a "central processing computer" that creates a marketplace for these partially-used tickets ('717 Patent, col. 2:20-25). The system allows a ticket holder (e.g., someone leaving an event) to post their ticket for its remaining duration, and allows a potential buyer to search for, purchase, and receive credentials for that ticket, all while the event is ongoing ('717 Patent, col. 12:5-35).
- Technical Importance: The technology provided a specific framework to create and manage a real-time, secondary marketplace for the residual temporal value of an event ticket, an asset that was previously illiquid once an event began (Compl. ¶¶19-21).
Key Claims at a Glance
- The complaint asserts infringement of claims 1-39, with Claim 39 (a dependent claim) noted as exemplary (Compl. ¶42). The first independent claim is Claim 1.
- Independent Claim 1 (Method):
- Storing, with a central processing computer, information regarding a ticket request for a portion of an event which remains after a start.
- Receiving and storing information regarding an available ticket for a portion of an event.
- Processing the ticket request using the available ticket information.
- Generating a ticket availability message.
- Transmitting the message to a second communication device.
- Receiving a response to the message.
- Processing information to consummate a transaction.
- Transmitting information regarding the purchased ticket and printing or displaying it.
- The complaint reserves the right to assert other claims, including dependent claims (Compl. ¶42).
U.S. Patent No. 10,185,918 - “Apparatus and Method for Selling a Ticket to an Event and/or to a Portion of an Event or Venue,” Issued January 22, 2019
The Invention Explained
- Problem Addressed: As a continuation of the '717 Patent's application, the '918 Patent addresses the same problem: the financial loss from completely or partially unused event tickets and the lack of a prior art system to facilitate their resale after an event has started ('918 Patent, col. 1:35-62).
- The Patented Solution: The '918 patent claims a system (or apparatus) comprising a central computer with a memory, receiver, processor, and transmitter that work in concert to manage the resale of tickets for a portion of an event ('918 Patent, Abstract). As depicted in Figure 1, the architecture involves a central computer communicating with multiple user devices and ticket issuer computers to facilitate these real-time transactions ('918 Patent, Fig. 1; col. 8:8-23).
- Technical Importance: This patent provides system-level protection for the technical infrastructure designed to create a secondary market for the unused portion of tickets for events already in progress (Compl. ¶¶20-21).
Key Claims at a Glance
- The complaint asserts infringement of claims 1-15 (Compl. ¶57). It also incorrectly references exemplary infringement of Claim 39, which does not exist in the '918 patent. The first independent method claim is Claim 1, and the first independent system claim is Claim 16.
- Independent Claim 1 (Method): This claim is substantively very similar to Claim 1 of the '717 Patent, reciting steps of storing requests, receiving availability information, processing, generating, and transmitting messages related to the sale of a ticket for a portion of an event.
- Independent Claim 16 (System):
- A computer comprising a memory, a receiver, a processor, and a transmitter.
- The memory stores a request for a ticket for a portion of an event.
- The receiver receives information about an available ticket for a portion of an event.
- The processor processes the request using the availability information and generates a message.
- The system includes a first communication device (e.g., a user's phone) that receives the message.
- The complaint reserves the right to assert other claims within the 1-15 range (Compl. ¶57).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendants' event ticket services, platforms, and systems, including the AXS website (tix.axs.com) and the associated AXS mobile application (Compl. ¶¶32, 34).
Functionality and Market Context
- The complaint alleges that the AXS platform allows users to buy and sell tickets to others for use after an event has started (Compl. ¶32). To support this, the complaint provides screenshots from the AXS website, taken at 9:57 PM on September 10, 2022, showing a ticket being offered for sale for a soccer match that began at 7:30 PM the same evening (Compl. p. 8, Figs. 1-4). This visual evidence depicts the user flow from selecting a ticket type through to the checkout page for the in-progress event (Compl. p. 8, Figs. 1-4). The complaint alleges Defendants operate these services extensively in Texas and throughout the United States (Compl. ¶6).
IV. Analysis of Infringement Allegations
'717 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| storing, with a first computer, information regarding a ticket request ... for a ticket for a portion of an event which remains after a start of the event and before a completion or a conclusion of the event... | The AXS platform, operating on Defendants' servers (the "first computer"), stores requests from users who search for and seek to purchase tickets for events that have already started (Compl. ¶¶32-33, 42). | ¶32, ¶42 | col. 23:55-61 |
| receiving and storing... information regarding an available ticket for a portion of an event which remains after a start of the event... when the first individual ... is leaving a venue of the event... | The AXS platform receives and stores listings for tickets that are available for purchase after an event has begun (Compl. ¶32, 42). The screenshots in Figures 1-4 are presented as evidence of a ticket being offered for sale for an event in progress (Compl. p. 8). | ¶32, ¶42, ¶44 | col. 24:21-34 |
| processing... the information regarding a ticket request... using the information regarding an available ticket... | Defendants' servers process user searches and purchase attempts by matching them with available ticket listings for events, including those already underway (Compl. ¶42). | ¶42 | col. 24:41-44 |
| generating... a ticket availability message... | The AXS platform generates and displays a webpage or in-app screen (a "message") showing the available ticket, its price, and location, as depicted in the user flow shown in Figures 1-4 (Compl. p. 8, Figs. 1-4). | ¶33, ¶44 | col. 24:45-53 |
| transmitting... the ticket availability message... to a second communication device... | Defendants' servers transmit the webpage or app screen containing the ticket availability information to the potential buyer's computer or mobile device (Compl. ¶32, 43). | ¶32, ¶43 | col. 24:54-65 |
- Identified Points of Contention:
- Scope Questions: A central question may be whether the phrase "when the first individual ... is leaving a venue" is a requirement for infringement or merely an exemplary environment. The complaint provides evidence of tickets for sale after an event starts but does not provide evidence that these tickets originated from a user who partially attended the event and then listed the remainder for sale.
- Technical Questions: What specific evidence links the "available ticket" on the AXS platform to a "ticket for a portion of an event"? A defendant may argue it is simply a standard secondary market ticket being sold late, not a new product representing only the remaining time, as contemplated by the patent.
V. Key Claim Terms for Construction
For the '717 Patent and '918 Patent
The Term: "a portion of an event which remains after a start"
Context and Importance: This phrase is the technological core of the asserted claims. Its construction will be critical to determining infringement. The dispute will likely center on whether this requires the creation of a new, distinct asset (the "remaining portion") from a previously-used ticket, or if it can read on any ticket sold after an event's start time.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claims themselves do not explicitly require that the ticket was partially used by a first holder. Language such as "selling a ticket... to a portion of an event" could be argued to cover any transaction for less than the full event duration ('717 Patent, col. 2:6-9).
- Evidence for a Narrower Interpretation: The specification repeatedly and consistently describes the invention in the context of a ticket holder who leaves an event early, thereby creating the "portion" to be resold ('717 Patent, col. 12:21-35). The background section frames the problem around recouping value from "partially used" tickets, which could support a narrower construction limited to that specific scenario ('717 Patent, col. 1:51-56).
The Term: "central processing computer"
Context and Importance: The claims require this entity to perform key steps like storing, processing, and generating information. Practitioners may focus on this term because the patents' 2000 priority date predates modern distributed cloud computing. The definition will determine if a modern, decentralized server architecture falls within the claim scope.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification refers to a "central processing computer or server computer," suggesting the term was not meant to be limited to a single machine ('918 Patent, col. 8:10-11). It also contemplates communication with "any number of user computers," implying a networked environment ('918 Patent, col. 8:12-13).
- Evidence for a Narrower Interpretation: Figure 1 in both patents depicts a single, unitary box labeled "CENTRAL PROCESSING COMPUTER," which could be used to argue for a more centralized architecture than the distributed systems common today ('717 Patent, Fig. 1).
VI. Other Allegations
- Indirect Infringement: The complaint alleges Defendants induce infringement by providing the AXS platform and advertising or otherwise encouraging its use to buy and sell tickets for events in progress (Compl. ¶¶46-47, 61-62). The complaint points to the functionality shown in Figures 1-4 as circumstantial evidence of intent (Compl. ¶48).
- Willful Infringement: The complaint alleges willful infringement on two grounds: (1) Defendants' alleged pre-suit knowledge of the patents, purportedly evidenced by "their own citation to the Alvao Patents in patent applications," and (2) post-suit knowledge established by the service of the complaint in this litigation (Compl. ¶¶39, 45, 54, 60).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of evidentiary proof: Can Plaintiff demonstrate that the tickets sold on the AXS platform after an event has started are for the "portion of an event which remains," as specifically described in the patents (i.e., the residual value of a partially-used ticket), or will the evidence merely show standard secondary-market tickets being sold after the event's official start time?
- A second central question will be one of claim construction: Can the term "central processing computer", originating from a patent with a 2000 priority date, be construed broadly enough to encompass the distributed, cloud-based server infrastructure of a modern service like the AXS platform?
- Finally, a key question for damages will be willfulness: The allegation that Defendants cited the patents-in-suit in their own patent applications, if substantiated, raises a significant issue of pre-suit knowledge that could support a finding of willful infringement and potential for enhanced damages.