Patent Armory Inc v. First Technology Federal Credit Union

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: First Technology Federal Credit Union (California)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 4:24-cv-04980, S.D. Tex., 12/19/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains an established place of business in the Southern District of Texas and has committed the alleged acts of infringement in the district.
• Core Dispute: Plaintiff alleges that Defendant’s customer communication systems infringe five U.S. patents related to intelligent call routing and auction-based systems for matching callers with service agents.
• Technical Context: The technology at issue involves advanced telecommunications management systems, such as those used in call centers, which optimize the routing of customer communications to agents based on skills, costs, and other economic factors.
• Key Procedural History: The complaint does not mention any prior litigation, Inter Partes Review (IPR) proceedings, or licensing history related to the patents-in-suit.

Case Timeline

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

U.S. Patent No. 10,237,420 - “Method and system for matching entities in an auction” (Issued March 19, 2019)

The Invention Explained

• Problem Addressed: The patent’s background section describes the inefficiency of traditional call center Automatic Call Distribution (ACD) systems, which often use simplistic routing rules like "first-come-first-served" (’420 Patent, col. 2:50-52). This approach is inadequate when agents possess varying skills, and managing more complex "skill-based routing" is a difficult optimization problem that existing systems handle statically and inefficiently (’420 Patent, col. 5:1-20).
• The Patented Solution: The invention proposes a system that treats the matching of an entity (e.g., a caller) to another entity (e.g., an agent) as a dynamic auction. The system performs an "automated optimization" that considers not only skill-based compatibility but also the "economic surplus" of a potential match and the "opportunity cost" of making a particular agent unavailable for a future, potentially more valuable, match (’420 Patent, Abstract). This allows for a more globally efficient allocation of agent resources in real time, as depicted in the multifactorial optimization process shown in Figure 4 (’420 Patent, Fig. 4).
• Technical Importance: This approach represents a shift from static, rule-based call queuing to a dynamic, economic-based model for resource allocation, intended to improve efficiency in large-scale, multi-skilled communication environments like modern call centers (’420 Patent, col. 5:59-col. 6:40).

Key Claims at a Glance

• The complaint asserts infringement of "one or more claims," including exemplary method claims, without specifying claim numbers (Compl. ¶15). Independent claim 1 is representative of the core inventive method.
• Independent Claim 1:
  • A method for matching a first entity with at least one second entity from a plurality of second entities, comprising:
  • Defining multivalued scalar data for the first entity (inferential targeting parameters) and for each second entity (characteristic parameters).
  • Performing an automated optimization considering the economic surplus of a match and the opportunity cost of making a second entity unavailable for an alternate first entity.
• The complaint reserves the right to assert additional claims (Compl. ¶15).

U.S. Patent No. 10,491,748 - “Intelligent communication routing system and method” (Issued November 26, 2019)

The Invention Explained

• Problem Addressed: The patent addresses the challenge of transactional throughput in call centers where agents are not equally adept at handling all types of transactions. Simple routing can lead to "under-skilled agent" or "over-skilled agent" problems, reducing overall efficiency (’748 Patent, col. 4:35-64).
• The Patented Solution: The invention is a communications routing system that determines an optimal routing path by "maximizing an aggregate utility." It does this by representing both communication sources (e.g., callers) and targets (e.g., agents) with "predicted characteristics," each having an "economic utility." The system then calculates the optimal pairing to maximize the overall system utility, rather than just finding the best fit for a single call (’748 Patent, Abstract). The system logic, as shown in Figure 1, can adapt its strategy, for example, by using simpler skill-based routing when the call center is near capacity versus a more complex cost-utility optimization during normal operation (’748 Patent, Fig. 1, items 306-312).
• Technical Importance: The concept of maximizing "aggregate utility" suggests a system-wide, holistic optimization that accounts for the interdependent nature of resource allocation in a complex call center, moving beyond sequential, one-at-a-time matching decisions (’748 Patent, col. 24:29-41).

Key Claims at a Glance

• The complaint asserts infringement of "one or more claims" without specifying claim numbers (Compl. ¶21). Independent claim 1 is representative of the claimed system.
• Independent Claim 1:
  • A communications routing system with a processor and memory configured to:
  • Represent predicted characteristics of communication sources, each having an economic utility.
  • Represent predicted characteristics of communication targets, each having an economic utility.
  • Determine an optimal routing by maximizing an aggregate utility with respect to the characteristics of the sources and destinations.
• The complaint reserves the right to assert additional claims (Compl. ¶21).

Multi-Patent Capsule: Additional Patents-in-Suit

• U.S. Patent No. 7,023,979: “Telephony control system with intelligent call routing” (Issued April 4, 2006)
  • Technology Synopsis: This patent, one of the earliest in the asserted portfolio, appears to disclose a foundational system for intelligent call routing. It addresses the technical problem of matching callers with appropriately skilled agents by using a processor to compute an optimal agent selection based on call classification and agent skill data (’979 Patent, Abstract).
  • Asserted Claims: The complaint asserts infringement of one or more unspecified method claims (Compl. ¶30).
  • Accused Features: The complaint accuses unspecified "Defendant Products" of practicing the claimed intelligent call routing technology (Compl. ¶30, 32).
• U.S. Patent No. 7,269,253: “Telephony control system with intelligent call routing” (Issued September 11, 2007)
  • Technology Synopsis: This patent appears to be a continuation of the technology in the ’979 Patent. It describes a system where communications are received, classification information is associated with them, and an optimal target is determined based on a combinatorial optimization that considers a cost-benefit analysis (’253 Patent, Abstract).
  • Asserted Claims: The complaint asserts infringement of one or more unspecified method claims (Compl. ¶36).
  • Accused Features: The complaint accuses unspecified "Defendant Products" of practicing the claimed intelligent call routing technology (Compl. ¶36, 38).
• U.S. Patent No. 9,456,086: “Method and system for matching entities in an auction” (Issued September 27, 2016)
  • Technology Synopsis: This patent is a direct predecessor to the ’420 Patent and discloses a method for matching entities by performing an automated, economic-based optimization. It introduces the concept of treating the matching process as an auction that considers both the "economic surplus" of a match and the "opportunity cost" of agent unavailability (’086 Patent, Abstract).
  • Asserted Claims: The complaint asserts infringement of one or more unspecified claims (Compl. ¶42).
  • Accused Features: The complaint accuses unspecified "Defendant Products" of practicing the claimed auction-based matching technology (Compl. ¶42, 47).

III. The Accused Instrumentality

Product Identification

• The complaint does not identify any accused product, method, or service by a specific name (Compl. ¶15, 21). It refers generally to "Exemplary Defendant Products" that are purportedly detailed in external exhibits which were not filed with the complaint (Compl. ¶17, 26, 32, 38, 47).

Functionality and Market Context

• The complaint alleges that Defendant, a credit union, makes, uses, sells, or imports products that practice the patented technologies (Compl. ¶15, 21). Based on the nature of the patents and the Defendant's business, these instrumentalities are presumably customer communication systems, such as call center software or online support platforms, that route customer inquiries to service agents. The complaint makes no allegations regarding the specific functionality or market position of these systems beyond conclusory statements that they "satisfy all elements" of the asserted claims (Compl. ¶17).

IV. Analysis of Infringement Allegations

The complaint does not contain claim charts or any specific factual allegations mapping claim elements to the functionality of an accused product. Instead, for each of the five asserted patents, it incorporates by reference external exhibits (Exhibits 6, 7, 8, 9, and 10) that were not filed on the public docket (Compl. ¶18, 27, 33, 39, 48). The complaint’s narrative theory of infringement is that the unspecified "Exemplary Defendant Products" practice the technology claimed in the patents-in-suit and satisfy all elements of the asserted claims (Compl. ¶17, 26, 32, 38, 47).

• Identified Points of Contention:
  • Evidentiary Questions: The primary point of contention arises from the lack of factual detail. The complaint’s conclusory allegations raise fundamental evidentiary questions. For example, what evidence does Plaintiff possess that the Defendant's customer service system performs an "automated optimization" that considers "economic surplus" and "opportunity cost" as required by claim 1 of the ’420 Patent? Similarly, what is the factual basis for the allegation that the Defendant's system works by "maximizing an aggregate utility" as required by claim 1 of the ’748 Patent?
  • Scope Questions: A central dispute may concern the scope of the patent claims relative to the functionality of standard commercial call-center software. A key question for the court could be whether the term "auction," as used in the context of the ’420 Patent, can be construed to cover the routine process of queuing and assigning customer calls in the system used by a credit union.

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

• Term 1 (’420 Patent, Claim 1): "automated optimization with respect to an economic surplus ... and an opportunity cost"
  • The Term: "automated optimization with respect to an economic surplus ... and an opportunity cost"
  • Context and Importance: This phrase is the central limitation of the ’420 Patent’s independent claims and distinguishes it from simple skill-based routing. The case may turn on whether Defendant's system performs a sophisticated economic calculation that meets this definition, or a more conventional routing process. Practitioners may focus on this term because it appears to require specific economic calculations that may not be present in off-the-shelf call center software.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification describes the "first entity" and "second entity" in general terms, suggesting applicability beyond formal auctions (’420 Patent, Abstract). The detailed description also notes the optimization can be influenced by both "economic and non-economic factors," which could be interpreted broadly (’420 Patent, col. 22:64-66).
    • Evidence for a Narrower Interpretation: The patent title is "Method and system for matching entities in an auction", which suggests the optimization is specific to an auction context. The specification provides complex mathematical formulas for calculating cost-utility functions, which may support a narrower construction requiring specific, multi-step economic modeling rather than simple cost-weighting (’420 Patent, col. 23:43-col. 24:65).
• Term 2 (’748 Patent, Claim 1): "maximizing an aggregate utility"
  • The Term: "maximizing an aggregate utility"
  • Context and Importance: This term is critical because it implies a global, system-wide optimization rather than a series of independent, localized decisions. Infringement may depend on whether the accused system considers the collective impact of routing decisions on the entire system ("aggregate utility") and performs a mathematical maximization, or whether it simply makes the best available one-to-one match for each incoming call.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification defines "utility" in broad business terms, including factors like "customer satisfaction," which could support an interpretation that does not require a formal, complex mathematical summation (’748 Patent, col. 24:30-41).
    • Evidence for a Narrower Interpretation: The claim's use of "maximizing" and "aggregate" suggests a specific computational process. The flow chart in Figure 1 distinguishes between simple routing and a more complex step of "optimize cost-utility function for long term call center operation," supporting a construction that requires more than conventional routing logic (’748 Patent, Fig. 1, item 312).

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement of the ’748 and ’086 Patents. The allegations state that since being served with the complaint, the Defendant has "actively, knowingly, and intentionally continued to induce infringement" by selling products to customers for use in an infringing manner (Compl. ¶25, 46). The complaint also alleges inducement is supported by Defendant’s distribution of "product literature and website materials" that instruct users (Compl. ¶24, 45).
• Willful Infringement: The complaint does not use the term "willful infringement." However, for the ’748 and ’086 Patents, it alleges "Actual Knowledge of Infringement" based on the service of the complaint and alleges that Defendant "continues to make, use, test, sell, [and] offer for sale" infringing products despite this knowledge (Compl. ¶23-24, 44-45). These allegations lay a foundation for a claim of post-suit willful infringement.

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

The resolution of this case will likely depend on the answers to two central questions:

• A core issue will be one of definitional scope: can patent terms like "auction," "economic surplus," and "maximizing an aggregate utility," which are derived from complex optimization theory, be construed to read on the customer communication and call-routing systems utilized by a financial institution?
• A key evidentiary question will be one of technical operation: assuming a broad claim construction, what evidence will emerge in discovery to demonstrate that the Defendant's accused systems actually perform the specific, multi-factorial, and economic-based optimization functions required by the asserted claims, as opposed to more conventional skill-based or rule-based routing?