DCT

4:25-cv-04031

Rady v. Boston Consulting Group Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 4:25-cv-04031, S.D. Tex., 10/27/2025
  • Venue Allegations: Plaintiff alleges venue is proper in the Southern District of Texas based on Defendants having regular and established places of business in the district (e.g., BCG's Houston office, De Beers and Signet retail stores) and committing acts of infringement, including making, using, selling, and importing accused products within the district.
  • Core Dispute: Plaintiff alleges that Defendants' "Tracr" platform and associated scanning machines, used for tracking diamonds and other high-value assets, infringe patents related to creating unique digital "fingerprints" of physical objects using 3D and spectral scanning technology.
  • Technical Context: The technology addresses the challenge of uniquely identifying and tracking physical items by generating a digital signature from their inherent, non-reproducible physical characteristics, a matter of significant market importance for authenticating high-value goods like diamonds and combating counterfeiting.
  • Key Procedural History: The complaint notes that a parent patent to those in suit (U.S. Patent No. 10,469,250) was the subject of a prior lawsuit, which was dismissed on the grounds that the asserted claim was directed to an abstract idea under 35 U.S.C. § 101, a decision affirmed by the U.S. Court of Appeals for the Federal Circuit. Plaintiff alleges the patents-in-suit are continuations with claims amended to overcome this issue by reciting a specific machine and system.

Case Timeline

Date Event
2017-12-22 Earliest Priority Date for ’261 and ’496 Patents (Provisional Filing)
2018-05-10 De Beers announces the launch of the accused Tracr platform
2019-11-05 Plaintiff's first patent (the '250 patent) is granted
2020-03-13 Plaintiff files first infringement lawsuit against De Beers and BCG on '250 patent
2024-03-27 Federal Circuit affirms dismissal of '250 patent lawsuit
2025-07-29 U.S. Patent No. 12,375,261 Issues
2025-08-26 U.S. Patent No. 12,401,496 Issues
2025-10-27 Complaint Filing Date

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

U.S. Patent No. 12,375,261 - "Physical Item Mapping to Blockchain Framework"

  • Patent Identification: U.S. Patent No. 12,375,261, titled "Physical Item Mapping to Blockchain Framework," issued July 29, 2025 (the "’261 Patent").

The Invention Explained

  • Problem Addressed: The patent’s background section identifies a fundamental weakness in using blockchain technology for physical items: the need to trust a third party to accurately link the physical object to its digital record, a reliance that "immediately destroys/diminishes the use of blockchain" (’261 Patent, col. 1:13-18). The complaint frames this problem in the context of the diamond industry's long-standing failure to reliably track stones from mine to consumer and prevent the trade of "blood diamonds" (Compl. ¶¶25-29).
  • The Patented Solution: The invention provides a hardware-based framework for creating a unique digital signature of a physical object based on its intrinsic, random physical characteristics (’261 Patent, Abstract). An apparatus with "item analysis components," including a spectral imager and a 3D laser scanner, captures data on features like flaws, inclusions, or surface textures, which are then combined to generate a unique identifier that can be recorded on a blockchain (’261 Patent, col. 1:21-44). This creates a verifiable link between the physical item and its digital record without relying on alterable external markings.
  • Technical Importance: The technology purports to solve the problem of "self-provenance" by creating a non-invasive and immutable way to identify and authenticate physical goods, which is particularly valuable for high-value items susceptible to counterfeiting or illicit trade (Compl. ¶¶24, 113).

Key Claims at a Glance

  • The complaint asserts infringement of at least independent claim 1 (Compl. ¶150).
  • Key elements of Claim 1, an apparatus claim, include:
    • A housing
    • A spectral imaging camera mounted in or on the housing
    • A light source mounted in or on the housing
    • A laser range scanner mounted in or on the housing
    • A processor and a non-transient computer-readable memory
    • The memory containing a plurality of pre-recorded unique digital signatures, where each signature comprises a "digital combination of spectral data and 3D scan data" that identifies and maps physical features (e.g., anomalies, inclusions, scratches) in 3D coordinate space.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 12,401,496 - "Physical Item Mapping to Blockchain Framework"

  • Patent Identification: U.S. Patent No. 12,401,496, titled "Physical Item Mapping to Blockchain Framework," issued August 26, 2025 (the "’496 Patent").

The Invention Explained

  • Problem Addressed: As the ’496 Patent shares its specification with the ’261 Patent, it addresses the same technical problem of reliably mapping physical items to a blockchain to establish provenance (’496 Patent, col. 1:4-18).
  • The Patented Solution: The solution is also a hardware-based framework for generating unique digital signatures from an object's inherent physical properties. The ’496 Patent claims the invention as a system that performs specific processing steps, whereas the ’261 Patent claims it as an apparatus with specific physical components (’496 Patent, col. 1:21-30).
  • Technical Importance: The technical importance is identical to that described for the ’261 Patent.

Key Claims at a Glance

  • The complaint asserts infringement of at least independent claim 1 (Compl. ¶168).
  • Key elements of Claim 1, a system claim, include:
    • One or more processors, a spectral imaging camera, a laser range scanner, a light source, and a non-transient computer-readable memory connected to a computer network.
    • The memory containing instructions that cause the processor(s) to:
      • Use spectral data and 3D scan data to identify and map physical features of an item in 3D coordinate space.
      • Generate a unique signature for the item based on the relative distances between those physical features.
      • Record the unique signature.
  • The complaint does not explicitly reserve the right to assert dependent claims.

III. The Accused Instrumentality

  • Product Identification: The accused instrumentalities include the "Tracr" platform, the "Valutrax" platform, and associated hardware such as "diamond scanning machines" (also referred to as sight boxes, robots, or RhoVol), the "Origyn Minting Box," and BCG's "IoT Boxes" (Compl. ¶¶11, 121, 138, 139).
  • Functionality and Market Context: The complaint alleges these platforms and machines are used to create a "digital twin" or "virtual replica" of physical items, primarily diamonds, by scanning them to map their unique, inherent characteristics (Compl. ¶¶122, 124). This process generates a unique identifier that is logged on a blockchain, creating a digital trail to track the item's provenance "from mine to finger" (Compl. ¶121). The Tracr platform is alleged to have been adopted by major industry players, including retailers Signet Jewelers and Brilliant Earth, to assure customers of the provenance and ethical sourcing of diamonds (Compl. ¶¶87, 132, 137). The Origyn Minting Box is alleged to apply the same technology to second-hand luxury goods (Compl. ¶138).

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits that were not provided with the filed document (Compl. ¶¶152, 153, 170, 171). The infringement theory is therefore summarized from the complaint's narrative allegations.

The core of the infringement allegation is that in order for the Tracr platform and its derivatives to function as advertised—reliably tracing a diamond from a rough stone to a final polished gem—every scanning machine on the platform must use the same patented method to generate a consistent digital fingerprint (Compl. ¶¶126-127). The complaint alleges these machines necessarily contain a 3D scanner (laser range scanner) and a spectral imaging camera to capture the required data on a stone's physical features, thereby infringing the claims (Compl. ¶127). The complaint provides a screenshot showing a confirmation of an anonymous report submission, including a reference number, related to the alleged misappropriation of the patented technology (Compl. p. 32). This visual evidence is presented to support the narrative that project insiders believed the technology was taken from the Plaintiff (Compl. ¶¶74-75).

For the ’261 Patent (apparatus claim), the complaint alleges direct infringement by all defendants who make, use, sell, or import the scanning machines, asserting that these machines are an apparatus containing the housing, scanners, processor, and memory recited in claim 1 (Compl. ¶¶152-157). For the ’496 Patent (system claim), the complaint alleges direct infringement by defendants who operate systems that use the accused scanners and processors to generate and record the unique signatures (Compl. ¶¶170-175). It also alleges contributory infringement against BCG, asserting its "IoT Boxes" are especially made to use customer-provided scan data to practice the claimed invention and have no substantial non-infringing use (Compl. ¶180).

  • Identified Points of Contention:
    • Scope Questions: A central legal dispute may concern patent eligibility under 35 U.S.C. § 101. Given that a parent patent was invalidated as an abstract idea, a primary question for the court will be whether the specific hardware elements recited in the claims of the ’261 and ’496 patents (e.g., "spectral imaging camera," "laser range scanner") are sufficient to constitute a patent-eligible application of the idea, rather than merely claiming the idea itself.
    • Technical Questions: The infringement case may turn on what technology the accused scanners actually employ. A key question of fact will be whether discovery confirms that the Tracr, Origyn, and Valutrax machines use the specific combination of a "spectral imaging camera" and a "laser range scanner" as claimed, or if they achieve a similar outcome through alternative optical or analytical means not covered by the claim language.

V. Key Claim Terms for Construction

  • The Term: "spectral imaging camera" (’261 Patent, Claim 1; ’496 Patent, Claim 1)

  • Context and Importance: The presence of this specific component is a cornerstone of the infringement allegation and a key distinction from the previously invalidated patent. Practitioners may focus on this term because Defendants could argue their devices use a different type of sensor technology that does not meet the definition of a "spectral imaging camera," thereby avoiding infringement.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification describes the component's function as assessing "spectral hypercube data" and identifying "irregularities in composition... at various spatial frequencies" (’261 Patent, col. 8:1-5). Plaintiff may argue this functional description should cover any device capable of performing this analysis.
    • Evidence for a Narrower Interpretation: The specification repeatedly cites a specific academic paper, "3D Imaging Spectroscopy for Measuring Hyperspectral Patterns on Solid Objects," in its description of the technology (’261 Patent, col. 8:25-33). Defendants may argue this ties the claim term to the specific technologies and methods disclosed in that reference, narrowing its scope.

  • The Term: "unique digital signatures comprising a digital combination of spectral data and 3D scan data" (’261 Patent, Claim 1)

  • Context and Importance: This term defines the output of the claimed invention. Its construction is critical because infringement depends on whether the accused systems generate a "signature" that is a "digital combination" in the manner contemplated by the patent.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The claim language itself is facially broad, suggesting that any data file or structure that merges or links the two specified data types could be considered a "digital combination."
    • Evidence for a Narrower Interpretation: The detailed description explains a more complex process of creating the signature, involving the re-orientation of the object in virtual space to align imperfections and comparing sets of triplets (’261 Patent, col. 4:39-46; col. 13:55-65). Defendants may argue that a "digital combination" must be structured in a way that enables this specific, sophisticated comparison, rather than being a simple aggregation of data.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges inducement against BCG, De Beers, Origyn, and Anglo American, asserting they actively encouraged and instructed their customers and partners to use the Tracr, Valutrax, and Origyn platforms, knowing that their use requires infringing scanning machines (Compl. ¶¶162-165, 183-186). Contributory infringement is alleged against BCG for its "IoT Boxes," which are claimed to be a material part of the invention with no substantial non-infringing use (Compl. ¶180).
  • Willful Infringement: The complaint alleges that Defendants' infringement has been willful. The basis for this allegation is extensive pre-suit knowledge, stemming from Plaintiff's alleged disclosure of his invention and pending patent application to BCG executives, who then allegedly misappropriated the technology for the De Beers "Tracr" project and continued to develop it despite Plaintiff's objections (Compl. ¶¶46-47, 51, 58, 160).

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

  • A core issue will be one of patent eligibility: Following the invalidation of a parent patent for being an abstract idea, can the specific hardware components recited in the apparatus and system claims of the ’261 and ’496 patents provide the necessary "inventive concept" to render the claims patent-eligible under 35 U.S.C. § 101?
  • A central evidentiary question will be one of technological correspondence: Do the accused scanning machines used in the Tracr, Valutrax, and Origyn ecosystems actually practice the claimed invention by using the specific combination of a "spectral imaging camera" and a "laser range scanner," or is there a fundamental mismatch between the accused technology and the patent's claim language?
  • The litigation will also present a question of equitable conduct and intent: How will the extensive and detailed allegations of trade secret misappropriation and bad faith, which form the backdrop of the infringement claims, influence the proceedings, particularly on the issues of willfulness and damages?