DCT

1:25-cv-00716

Malikie Innovations Ltd v. Toast Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:25-cv-00716, W.D. Tex., 05/12/2025
  • Venue Allegations: Plaintiff alleges venue is proper in the Western District of Texas because Defendant Toast has a regular and established place of business in the District and employs at least 53 individuals there.
  • Core Dispute: Plaintiff, as successor-in-interest to a portfolio developed by BlackBerry and Nortel, alleges that Defendant’s point-of-sale (POS) systems infringe six patents related to user interface gestures, near-field communication (NFC) payment protocols, and wireless communication (Wi-Fi) standards.
  • Technical Context: The technologies at issue cover fundamental aspects of modern payment terminals, including touchscreen interactions, contactless "tap-to-pay" functionality, and the underlying Wi-Fi networking used for transaction processing.
  • Key Procedural History: The complaint alleges that Plaintiff provided Defendant with notice of infringement via letters dated November 15, 2024, and March 31, 2025. The complaint also states that on April 25, 2025, Plaintiff offered Defendant a license to its patents essential to the IEEE 802.11 standard on Fair, Reasonable, and Non-Discriminatory (FRAND) terms, which was not accepted.

Case Timeline

Date Event
2004-10-12 Earliest Priority Date (’212 Patent)
2005-10-18 Earliest Priority Date (’980 Patent)
2007-10-19 Earliest Priority Date (’847 Patent)
2008-09-30 Earliest Priority Date (’195 Patent)
2011-03-17 Earliest Priority Date (’259 Patent)
2011-10-07 Earliest Priority Date (’116 Patent)
2012-05-08 ’116 Patent Issued
2012-12-18 ’847 Patent Issued
2013-03-05 ’259 Patent Issued
2013-11-12 ’980 Patent Issued
2013-12-24 ’195 Patent Issued
2020-09-15 ’212 Patent Reissued
2024-11-15 Plaintiff sends first notice letter to Defendant
2025-03-31 Plaintiff sends second notice letter to Defendant
2025-04-25 Plaintiff sends FRAND license offer to Defendant
2025-05-12 Complaint Filed

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

U.S. Patent No. 8,334,847 - "System having user interface using object selection and gestures," Issued Dec. 18, 2012

The Invention Explained

  • Problem Addressed: The patent's background describes the problem of "display crowding" on the user interfaces of processor-based devices, which can make it difficult for a user to accurately select on-screen objects or controls that are in close proximity to one another (’847 Patent, col. 1:35-41).
  • The Patented Solution: The invention provides a system that distinguishes between two types of user input on a touchscreen: an "object selection" and a "gesture." The system's interface application detects the magnitude of a touch's motion within a defined "container" area on the display; if the movement is below a set threshold, it is interpreted as the user selecting a specific object, whereas movement exceeding the threshold is identified as a gesture intended to execute a different function (’847 Patent, Abstract; col. 2:44-55). This logic is implemented within a multilayer display arrangement (’847 Patent, col. 2:62-65).
  • Technical Importance: The described solution offered a method to improve the usability and accuracy of touch interfaces on devices with increasingly complex and dense visual controls (Compl. ¶48).

Key Claims at a Glance

  • The complaint asserts independent claim 14 (Compl. ¶51).
  • Essential elements of claim 14 include:
    • Detecting a touch or contact in a "container area" on a display having selectable objects.
    • Comparing the "magnitude of the movement" of the touch to a "threshold value".
    • Executing a function associated with the "movement" (a gesture) if the magnitude is beyond the threshold.
    • Detecting if the touch is in an "active area" of an object if the magnitude is below the threshold.
    • Executing a function associated with "selection" of the object if the touch is detected in its active area.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,392,259 - "Methods and apparatus to obtain transaction confirmation," Issued Mar. 5, 2013

The Invention Explained

  • Problem Addressed: The patent identifies the need for consumers to receive confirmation for wireless transactions, such as those using NFC, without relying on a traditional paper receipt, which wireless payment users often seek to avoid (’259 Patent, col. 1:11-16; Compl. ¶57).
  • The Patented Solution: The invention describes a method and system where a point-of-sale (POS) terminal first receives payment information from a customer's mobile device via a close-proximity communication link (e.g., NFC). The POS terminal then switches its communication device to a "transfer mode" and sends a transaction confirmation back to the mobile device. The patent specifies that both the payment and the confirmation transfer occur "within a single instance" of the mobile device being in range of the POS terminal (’259 Patent, Abstract; col. 2:4-10).
  • Technical Importance: This approach creates a seamless, all-digital transaction experience by providing an immediate electronic receipt, thereby increasing convenience and reducing paper waste (Compl. ¶57).

Key Claims at a Glance

  • The complaint asserts independent claim 15 (Compl. ¶61).
  • Essential elements of claim 15 include:
    • Entering an "information receiving communication mode" of a close-proximity device at a POS terminal.
    • "Receiving payment information" from a mobile device.
    • "Switching" the close-proximity device of the POS terminal to a "transfer mode".
    • "Transferring a transaction confirmation" to the mobile device.
    • Requiring that the receiving and transferring steps are carried out "within a single instance" of the mobile device being within range of the POS terminal.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,583,980 - "Low density parity check (LDPC) code," Issued Nov. 12, 2013 (Multi-Patent Capsule)

  • Technology Synopsis: The ’980 Patent is directed to low-density parity-check (LDPC) codes used in forward error correction techniques, particularly in Wi-Fi 802.11 protocols. The invention is described as improving the speed, accuracy, and efficiency of data transmission over a communication channel compared to prior art methods (Compl. ¶67).
  • Asserted Claims: At least independent claim 31 (Compl. ¶68).
  • Accused Features: Defendant's "various Wi-Fi-enabled POS products" are accused of infringing (Compl. ¶68).

U.S. Patent No. 8,615,195 - "Mobile wireless communications device having touch activated near field communications (NFC) circuit," Issued Dec. 24, 2013 (Multi-Patent Capsule)

  • Technology Synopsis: The ’195 Patent describes a mobile device with an NFC circuit that is activated only when a user touches a designated sensor on the device. This provides an explicit, user-initiated trigger for NFC transactions, intended to enhance simplicity and ease-of-use (Compl. ¶76; ’195 Patent, col. 2:60-3:3).
  • Asserted Claims: At least independent claim 15 (Compl. ¶79).
  • Accused Features: Defendant's "POS terminals" that allegedly enable NFC communications and have a "touch activated sensor" are accused of infringing (Compl. ¶79).

U.S. Patent No. 8,676,116 - "Electronic device with NFC antenna adjacent display and related methods," Issued May 8, 2012 (Multi-Patent Capsule)

  • Technology Synopsis: The ’116 Patent addresses the technical challenge of placing an NFC antenna within a compact electronic device without it suffering from interference from nearby components. The patented solution is an innovative layout where the NFC antenna is positioned within the device's housing, behind and adjacent to the display, to improve its operational efficiency (Compl. ¶86; ’116 Patent, col. 1:31-39).
  • Asserted Claims: At least independent claim 1 (Compl. ¶89).
  • Accused Features: Defendant's products that contain a specific physical arrangement of a "housing with a display opening," processing circuitry, a display, and an "NFC antenna behind" the display are accused of infringing (Compl. ¶89).

U.S. Patent No. RE48,212 - "Structured low-density parity-check (LDPC) code," Reissued Sep. 15, 2020 (Multi-Patent Capsule)

  • Technology Synopsis: The ’212 Patent relates to methods for constructing LDPC codes, which are used for error correction in digital communications. The method involves using a structured base parity check matrix and expanding it, a technique relevant to standards-based communication protocols like Wi-Fi (Compl. ¶95).
  • Asserted Claims: At least independent claim 20 (Compl. ¶98).
  • Accused Features: Defendant's "various Wi-Fi enabled products" are accused of infringing (Compl. ¶98).

III. The Accused Instrumentality

Product Identification

  • The accused instrumentalities are Defendant Toast, Inc.’s point-of-sale (POS) products, services, and associated hardware and software, including Wi-Fi-enabled POS products and POS terminals (Compl. ¶¶68, 79). The complaint specifically refers to the "Toast Go 2" as an exemplary product in the context of its website instructions (Compl. ¶72).

Functionality and Market Context

  • The complaint describes the accused products as systems used for processing payments and managing business operations, which incorporate several key technologies (Compl. ¶¶44, 45). The allegedly infringing functionalities include: (1) the software user interface on the devices' touchscreens; (2) the capability to conduct contactless payments using NFC technology; (3) the physical hardware design and layout of components such as the NFC antenna; and (4) the use of IEEE 802.11 (Wi-Fi) standards for network communications (Compl. ¶¶51, 61, 68, 79, 89, 98). Plaintiff positions these technologies as foundational innovations developed by BlackBerry and Nortel that are now used by Toast (Compl. ¶¶44, 45).
    No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references exemplary claim charts attached as Exhibits 7 and 8 for the ’847 and ’259 patents, respectively; however, these exhibits were not included with the complaint document provided for analysis. The infringement theories are summarized below based on the narrative allegations in the complaint.

  • ’847 Patent Infringement Allegations

    • Narrative Summary: The complaint alleges that Toast's POS products directly infringe claim 14 by providing a touchscreen user interface that differentiates user intent based on the magnitude of touch movement. Specifically, it alleges the software detects whether a touch movement is below a certain threshold value to register it as a "selection" of an on-screen object, and when the movement exceeds that threshold, it executes a different function associated with a "gesture" (Compl. ¶¶47, 51).
    • Identified Points of Contention:
      • Scope Questions: A central question may be whether the term "container", which the patent describes in the context of a "movie clip container in a FLASH® player environment," can be construed to read on the user interface architecture of Toast's modern POS software (’847 Patent, col. 2:61-62).
      • Technical Questions: The analysis may turn on what evidence demonstrates that the accused interface technically operates by comparing the "magnitude of the movement" of a touch to a specific "threshold value" to distinguish between selection and gesture functions, as required by the claim language (Compl. ¶51).

  • ’259 Patent Infringement Allegations

    • Narrative Summary: The complaint alleges that Toast's POS terminals infringe claim 15 when processing an NFC payment from a mobile device. The theory is that the Toast terminal first enters a mode to receive payment information, and after receiving it, switches to a transfer mode to send a transaction confirmation back to the mobile device. Critically, the complaint alleges these actions of receiving payment and transferring confirmation occur "within a single instance" of the mobile device being in proximity to the terminal (Compl. ¶¶61, 13).
    • Identified Points of Contention:
      • Scope Questions: A likely point of dispute will be the construction of "single instance." The case may depend on whether the payment and confirmation steps constitute one continuous, integrated communication event, or if they are technically separate communication instances that merely occur in rapid succession.
      • Technical Questions: A key factual question will be whether the Toast POS terminal's NFC device actually performs the claimed step of "switching" its operational mode from receiving to transferring, or if the confirmation is delivered through a different technical mechanism not contemplated by the claim.

V. Key Claim Terms for Construction

  • For the ’847 Patent:

    • The Term: "container" (from claim 14)
    • Context and Importance: The applicability of the patent to the accused products hinges on the scope of this term. A narrow construction could limit the claim to the specific software environment described in the patent, potentially placing Toast's modern UI architecture outside its scope. Practitioners may focus on this term because of the potential for a non-infringement argument based on technological evolution since the patent was filed.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification describes the container as a general element for arranging visual objects on a display, stating that controls and a text area "may be arranged within a container 245" (’847 Patent, col. 2:59-62). This could support a reading of "container" as any logical grouping of UI elements.
      • Evidence for a Narrower Interpretation: The detailed description explicitly links the container to a specific technology, stating it is "such as a movie clip container in a FLASH® player environment" (’847 Patent, col. 2:61-62). A defendant may argue this language limits the claim to that particular technical implementation.

  • For the ’259 Patent:

    • The Term: "single instance" (from claim 15)
    • Context and Importance: This temporal limitation is the core of the infringement theory. If the payment and confirmation are found to be two distinct "instances" of communication, even if they occur closely in time during a single physical "tap," there would be no literal infringement. The case's outcome may depend entirely on how this duration is defined.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The patent abstract states the process involves "transferring payment information and receiving a transaction confirmation... within a single instance of the close-proximity communication device... being within range." This suggests the "instance" is defined by the physical proximity of the devices, which could encompass multiple protocol-level exchanges (’259 Patent, Abstract).
      • Evidence for a Narrower Interpretation: A defendant could argue that in the context of communication protocols, an "instance" refers to a single, discrete handshake or session. The payment and confirmation could be argued to be two separate protocol instances, even if they occur during one continuous period of physical proximity.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges both induced and contributory infringement for all six asserted patents. The inducement claims are based on allegations that Toast actively encourages infringement by, for example, selling the accused products and providing instructions on its website for setting up and using the accused payment and Wi-Fi features (Compl. ¶¶53, 63, 72, 81, 91, 100). The complaint cites a URL for setup instructions related to the ’980 and ’212 patents (Compl. ¶¶72, 100).
  • Willful Infringement: Willfulness is alleged for all six asserted patents. The claim is based on alleged pre-suit knowledge stemming from notice letters sent to Toast on November 15, 2024, and March 31, 2025, and Toast's alleged failure to cease infringing activities after being notified (Compl. ¶¶55, 65, 74, 84, 93, 102).

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

  • A core issue will be one of technological scope: can claim terms rooted in the context of early mobile technologies, such as a "container" in a "FLASH® player environment" (’847 Patent), be construed broadly enough to cover the substantially different software architecture of a modern, sophisticated point-of-sale system?
  • A key evidentiary question will be one of functional operation: does the accused NFC payment process technically operate as a single, integrated event where the POS terminal switches modes to send a confirmation "within a single instance," as claimed in the ’259 patent, or does it involve separate, distinct communication steps that fall outside the claim's temporal scope?
  • For the patents asserted as essential to the IEEE 802.11 standard (’980 and ’212), a central dispute may concern damages and FRAND obligations: if the claims are found to be standard-essential and infringed, what is the appropriate reasonable royalty, and how will the Plaintiff’s pre-suit offer to license on FRAND terms influence that determination?