DCT
6:19-cv-00513
CloudofChange LLC v. NCR Corp
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: CloudofChange, LLC (New York)
- Defendant: NCR Corporation (Maryland)
- Plaintiff’s Counsel: Patterson + Sheridan LLP
- Case Identification: 6:19-cv-00513, W.D. Tex., 08/30/2019
- Venue Allegations: Plaintiff alleges venue is proper in the Western District of Texas because Defendant maintains a regular and established place of business in the district and has committed alleged acts of patent infringement there.
- Core Dispute: Plaintiff alleges that Defendant’s NCR Silver cloud-based point-of-sale system infringes patents related to a web-based method for building and configuring point-of-sale terminals.
- Technical Context: The technology concerns systems that allow non-expert users, such as business owners, to create and modify the on-screen interfaces of point-of-sale (POS) systems via a web browser, reducing reliance on specialized programmers.
- Key Procedural History: The complaint alleges that Plaintiff sent a notice letter to Defendant on January 19, 2018, identifying the ’640 Patent and pending related applications. This notice, allegedly received by Defendant on January 23, 2018, forms the basis for the willfulness allegations.
Case Timeline
| Date | Event |
|---|---|
| 2008-02-05 | Priority Date for ’640 and ’012 Patents |
| 2014-04-24 | Publication date of accused "NCR Silver Overview" video |
| 2016-07-26 | U.S. Patent No. 9,400,640 Issues |
| 2017-10-03 | Publication date of accused "Getting started" video |
| 2018-01-19 | Plaintiff sends notice letter to Defendant |
| 2018-01-23 | Defendant allegedly receives notice letter |
| 2018-09-25 | U.S. Patent No. 10,083,012 Issues |
| 2019-08-30 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 9,400,640 - WEB-BASED POINT OF SALE BUILDER
The Invention Explained
- Problem Addressed: The patent describes that prior to the invention, creating or modifying POS terminal screens was a manual process requiring a "business expert with the help of a programmer or data expert" ('640 Patent, col. 1:23-26). This process was described as "time-consuming" and "prone to mistakes," which caused business owners to avoid updating their POS systems ('640 Patent, col. 1:33-38).
- The Patented Solution: The invention is a "web-based point of sale (POS) builder" system that allows non-expert operators to build, edit, and test POS terminals remotely and in real time using a web browser ('640 Patent, col. 2:13-18). The system architecture separates the POS terminals in a store from a central web server running "POS builder software," with the two connected by the internet ('640 Patent, Fig. 3). This "loose coupling" allows the POS terminals to continue functioning even if the internet connection to the back-office server is down ('640 Patent, col. 4:4-7).
- Technical Importance: The invention purports to shift POS customization from a specialized, offline programming task to a dynamic, online configuration process accessible to end-users.
Key Claims at a Glance
- The complaint asserts at least independent Claim 1 (Compl. ¶24).
- Claim 1 Essential Elements: A system comprising:
- one or more point of sale terminals that display POS screens
- an internet connection from the terminals to a web server
- one or more local or remote PC workstations
- point of sale builder software that runs on the web server
- wherein the workstations are utilized to build or edit the POS terminals in real time over the web
- wherein the web servers are provided as a "vendor subscription service" where software resides on the vendor's remote servers and is accessed by the subscriber's POS terminals
U.S. Patent No. 10,083,012 - WEB-BASED POINT OF SALE BUILDER
The Invention Explained
- Problem Addressed: The ’012 Patent shares a common specification with the ’640 Patent and thus addresses the same problem: the difficulty, time, and expertise required for manual, programmer-driven coding of POS terminal interfaces ('012 Patent, col. 1:31-48).
- The Patented Solution: The solution is likewise a web-based system enabling real-time, remote editing of POS terminals by non-experts ('012 Patent, Abstract). The claims of the ’012 Patent, however, focus more on the specific interactions between the system components.
- Technical Importance: As with the '640 Patent, the technology aims to democratize the process of POS system configuration.
Key Claims at a Glance
- The complaint asserts at least independent Claim 1 (Compl. ¶39).
- Claim 1 Essential Elements: A system comprising:
- a web server with "POS builder software" installed on it
- one or more POS terminals "generated by" the builder software, which are configured to accept transactions and collect data
- a "POS builder interface" accessible over a network
- wherein the interface is used to access the builder software to "programmatically create or modify" the POS terminals in real time
- wherein the builder software is configured to interact with the POS terminals based on instructions from the interface
- wherein transaction data from the terminals is transmitted to the web server and correlated with each transaction
III. The Accused Instrumentality
Product Identification
The accused instrumentality is the "NCR Silver" system, which includes "NCR Silver® software as a service, related hardware, [and] application software" (Compl. ¶11).
Functionality and Market Context
The complaint alleges that NCR Silver is a "cloud-based POS solution" (Compl. ¶25). This system is marketed as turning a device like an iPad into a mobile POS (Compl. ¶29). A screenshot from an NCR promotional video shows the system described as "Powered by cloud-based software" (Compl. ¶29, p. 10). The system allegedly includes a "Back Office" component, accessible from workstations, that is used to configure and add items to the POS terminal interface (Compl. ¶29, ¶42-43). The complaint also references an NCR webpage showing a monthly subscription pricing model for "NCR Silver One Essentials" (Compl. ¶30). A screenshot from an NCR instructional video shows a user logging into the "Back Office" via a link in a welcome email to manage the POS app (Compl. ¶28, p. 9).
IV. Analysis of Infringement Allegations
’9,400,640 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| one or more point of sale terminals, that display POS screens | The NCR Silver system includes POS terminals, such as iPads, which display POS screens. A screenshot in the complaint shows a POS screen on an iPad. | ¶26 | col. 2:25-26 |
| an internet connection from said one or more point of sale terminals to a web server | The complaint alleges NCR Silver terminals connect to NCR's web servers via the internet, citing NCR's terms of service which promise service availability "via Internet access." | ¶27 | col. 2:26-27 |
| one or more local or remote PC workstations | The complaint alleges that users utilize local or remote PC workstations to access the NCR Silver "Back Office" to manage the system. A screenshot shows a user on a laptop accessing a welcome link for the "Back Office." | ¶28 | col. 2:28 |
| point of sale builder software that runs on said web server | NCR Silver is alleged to be "powered by cloud-based software" that runs on NCR's servers and functions as the POS builder software. | ¶29 | col. 2:28-29 |
| wherein said local or remote workstations are utilized to build or edit said POS terminals in real time, from anywhere in the world and over the worldwide web | The complaint alleges that the "Back Office" is used via workstations to "build or edit said POS terminals in real time, from anywhere in the world," citing an NCR document stating the system provides "real-time Back Office access from anywhere." | ¶29 | col. 2:29-32 |
| wherein said web servers are provided as a vendor subscription service wherein web server software resides and is hosted on said vendor's remote servers... and wherein subscriber company's POS terminals access and repeatedly interact with said web server software... wherein the network comprises the Internet | The complaint alleges NCR offers its system as a subscription service, citing a webpage for "NCR Silver One Essentials" with monthly pricing. It alleges this service involves software on NCR's servers that interacts with customer POS terminals over the internet. | ¶30 | col. 5:6-14 |
’10,083,012 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a web server including POS builder software installed thereon | NCR Silver is alleged to operate on a web server running "cloud-based software" that functions as the POS builder software. | ¶41 | col. 6:18-19 |
| one or more POS terminals generated by said POS builder software and said one or more POS terminals configured to be accessible at one or more terminal devices, said POS terminals configured to accept POS transactions and collect corresponding transaction data | The complaint alleges that the NCR Silver software generates POS terminals on devices like an iPad, and that these terminals accept transactions and collect data. | ¶42 | col. 6:20-25 |
| a POS builder interface configured to be accessible via network communication with said web server over a communications network | The NCR Silver "Back Office" is alleged to be the POS builder interface, accessible over a network. | ¶43 | col. 6:26-29 |
| wherein said POS builder interface is configured to be utilized to access said POS builder software for programmatically creating or modifying said one or more POS terminals in real time over the communications network | It is alleged that the "Back Office" interface is used to access the builder software to "programmatically creating or modifying" the POS terminals in real time. | ¶43 | col. 6:30-34 |
| wherein said POS builder software is configured to interact with said one or more POS terminals over the communications network in order for the... system to perform functions in accordance with instructions sent from the POS builder interface | The complaint alleges the server software is configured to interact with the POS terminals to carry out functions based on instructions sent from the "Back Office" interface. | ¶43 | col. 6:35-42 |
| wherein said POS transactions and corresponding transaction data... are configured to be transmitted to said web server... and wherein each POS transaction is correlated with corresponding transaction data | The complaint alleges that transaction data from NCR Silver terminals is transmitted to the web server and correlated with the transactions. | ¶43 | col. 6:43-50 |
Identified Points of Contention
- Scope Questions: Do the distinct components of '640 Claim 1 ("terminals," "workstations," "web server") have separate identities in the integrated NCR Silver system, or does the claim language require a more physically distributed architecture than what is alleged? For the '012 patent, does the term "generated by" require the software to create the terminal application from scratch, or can it be read to cover the configuration of a pre-existing application template?
- Technical Questions: What is the specific mechanism by which the NCR Silver "Back Office" modifies the POS terminals? The infringement analysis for the '012 patent will question whether this mechanism constitutes "programmatically creating or modifying" as required by the claim, or if it is a simpler form of data configuration that falls outside the claim's scope.
V. Key Claim Terms for Construction
The Term: "POS builder software" (asserted in '640 and '012 patents)
Context and Importance
This term is the core of the invention. Its construction will determine whether the functionality of NCR's "Back Office" falls within the claims. Practitioners may focus on this term because the dispute will likely center on whether NCR's cloud-based configuration tools perform the specific functions of the claimed "builder software."
Intrinsic Evidence for Interpretation
- Evidence for a Broader Interpretation: The specification describes the software in general terms as enabling a non-expert to "build his POS screens online" ('012 Patent, col. 3:10-11) and providing an interface to "enter and/or modify item name, price, cost, group, taxable and inventory" ('012 Patent, col. 5:1-2). This could support a broad definition covering any web-based POS configuration tool.
- Evidence for a Narrower Interpretation: The specification includes a specific flowchart (FIG. 5) illustrating the "point of sale builder methodology" ('012 Patent, col. 5:4-6) and specific screen layouts (FIG. 4a, 4b). A defendant might argue that "POS builder software" must be limited to software that implements this specific, disclosed process.
The Term: "vendor subscription service" (asserted in '640 patent)
Context and Importance
This term, appearing only in the '640 patent's independent claim, introduces a commercial or business model limitation. Its construction is critical because if interpreted to require a specific technical arrangement beyond a simple subscription model, it could provide a basis for a non-infringement argument.
Intrinsic Evidence for Interpretation
- Evidence for a Broader Interpretation: The patent itself provides little specific definition for this term, which may lead a court to give it a plain and ordinary meaning consistent with a commercial subscription for software access. The patent does mention "Software as a Service (SAAS)" as an advantage, which is described as a "software distribution model in which applications are hosted by a vendor or service provider" ('640 Patent, col. 6:10-14).
- Evidence for a Narrower Interpretation: A defendant could argue this term, in context, requires more than just a payment model. The full limitation requires that the "web server software resides and is hosted on said vendor's remote servers" and is accessed by the "subscriber company's POS terminals." A party could argue this implies a specific multi-tenant hosting architecture that must be proven.
VI. Other Allegations
Indirect Infringement
The complaint alleges induced infringement, stating that NCR sells and leases NCR Silver with the intent that its customers will use the system in an infringing manner, and provides instructions for such use (Compl. ¶22, ¶37). It also alleges contributory infringement on the basis that NCR Silver is especially made for an infringing use and is not a staple article of commerce with substantial non-infringing uses (Compl. ¶23, ¶38).
Willful Infringement
Willfulness is alleged based on pre-suit knowledge. The complaint claims NCR has been aware of the '640 patent since at least its receipt of a notice letter on January 23, 2018 (Compl. ¶15, ¶31). For the '012 patent, which issued after the notice letter, the complaint alleges willfulness since at least the patent's issuance date, arguing the notice letter made NCR aware of the pending application family (Compl. ¶44).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of architectural mapping: does the integrated, cloud-based architecture of the accused NCR Silver product map onto the discrete system elements recited in the claims—particularly the "workstations," "web server," and "terminals" of '640 Claim 1—or is there a mismatch between the claimed component structure and the accused system's unified service offering?
- A key evidentiary question will be one of functional scope: does the NCR Silver "Back Office" perform the "programmatic" creation and modification required by '012 Claim 1? The case may turn on whether the accused system's configuration process is functionally equivalent to the specific, structured "builder" methodology disclosed in the patents, or if it is a more generic data management tool that operates differently.
- Finally, for the '640 patent, a central question will be the construction of a commercial limitation: is the term "vendor subscription service" merely a description of a business model, or does it impose a specific, limiting technical structure on the server-hosting arrangement that Plaintiff must prove is met by the NCR Silver system?