AlmondNet Inc v. Microsoft Corp

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: AlmondNet, Inc. and Intent IQ, LLC (Delaware)
  • Defendant: Microsoft Corporation (Washington) and Xandr, Inc. (Delaware)
  • Plaintiff’s Counsel: Russ August & Kabat
• Case Identification: 6:21-cv-00897, W.D. Tex., 04/12/2023
• Venue Allegations: Venue is alleged to be proper in the Western District of Texas because both Microsoft and its subsidiary Xandr are registered to do business in Texas and maintain regular and established places of business in Austin, within the district.
• Core Dispute: Plaintiff alleges that Defendant’s advertising platform infringes four patents related to targeted online advertising, user profiling, and cross-device tracking.
• Technical Context: The dispute centers on foundational technologies for targeted advertising, a critical component of the modern digital economy that relies on user data to deliver relevant ads across multiple platforms.
• Key Procedural History: This filing is a Second Amended Complaint. The complaint alleges willful infringement based on Defendant's alleged pre-suit knowledge of the patent families, citing their appearance in the prosecution history of Microsoft’s own patents.

Case Timeline

Date	Event
1999-12-13	Earliest Priority Date for U.S. Patent No. 8,244,582
2000-11-28	Earliest Priority Date for U.S. Patent No. 7,822,639
2006-06-16	Earliest Priority Date for U.S. Patent No. 8,671,139
2007-04-17	Earliest Priority Date for U.S. Patent No. 8,677,398
2010-10-26	U.S. Patent No. 7,822,639 Issued
2012-08-14	U.S. Patent No. 8,244,582 Issued
2014-03-11	U.S. Patent No. 8,671,139 Issued
2014-03-18	U.S. Patent No. 8,677,398 Issued
2023-04-12	Second Amended Complaint Filed

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

U.S. Patent No. 8,244,582 - "Method and stored program for accumulating descriptive profile data along with source information for use in targeting third-party advertisements"

• Patent Identification: U.S. Patent No. 8,244,582, titled "Method and stored program for accumulating descriptive profile data along with source information for use in targeting third-party advertisements," issued August 14, 2012 (the "’582 Patent"). (Compl. ¶9).

The Invention Explained

• Problem Addressed: The patent’s background describes a limitation in the commerce of information, which at the time was focused on the sale of whole databases or records. This model precluded commerce in specific, individual "attributes" of information (e.g., a single data point about a user's interest), which are highly valuable for applications like targeted advertising. (’582 Patent, col. 2:1-11).
• The Patented Solution: The invention discloses a "descriptive-profile mercantile method" that functions as a brokerage for individual information attributes. In this system, a user (such as a website publisher) can send a partial profile of a visitor to a central databank. The system then facilitates a transaction where the publisher can either sell new attributes about that visitor to the databank or buy additional attributes from the databank to enrich its own profile, creating a viable economic model for trading discrete pieces of user data. (’582 Patent, Abstract; col. 3:18-42).
• Technical Importance: The technology provides a framework for monetizing individual user data points rather than entire user records, a concept foundational to modern programmatic advertising exchanges where specific audience segments are bought and sold. (Compl. ¶2).

Key Claims at a Glance

• The complaint asserts independent claim 1 of the ’582 Patent. (Compl. ¶15).
• The essential elements of independent claim 1 include:
  • Electronically receiving a partial profile of an entity from a server of an unaffiliated third party.
  • Achieving the receipt via an automatic electronic URL redirection from a page of the third party's website.
  • Automatically adding the received partial profile to a maintained profile believed to be related to the same entity.
  • Automatically generating and storing an electronic record of which third party contributed the particular profile attributes.
  • Using the data in the maintained profile for targeting third-party advertisements to the entity's computer.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,677,398 - "system and methods for taking action with respect to one network-connected device based on activity on another device connected to the same network"

• Patent Identification: U.S. Patent No. 8,677,398, titled “system and methods for taking action with respect to one network-connected device based on activity on another device connected to the same network,” issued March 18, 2014 (the "’398 Patent"). (Compl. ¶19).

The Invention Explained

• Problem Addressed: The patent addresses the challenge of targeting advertisements across different devices used by the same person or household (e.g., from a computer to a television) without relying on personally identifiable information (PII). Linking behavior on separate devices was a known technical hurdle for privacy-conscious advertising. (’398 Patent, col. 1:19-24; col. 7:14-21).
• The Patented Solution: The invention proposes a method for electronically associating different network-connected devices that are connected to the same local network. The system can observe online behavior from a first device (e.g., a computer) and use that information to trigger an action, such as delivering a targeted television advertisement, to an associated second device (e.g., a set-top box) on the same network, all without using PII to link the devices. (’398 Patent, Abstract; col. 8:1-12).
• Technical Importance: This invention describes a method for cross-device targeting, a crucial capability that allows advertisers to create a unified view of a consumer across different platforms like desktops, mobile phones, and smart TVs. (Compl. ¶2).

Key Claims at a Glance

• The complaint asserts independent claim 13 of the ’398 Patent. (Compl. ¶25).
• The essential elements of independent claim 13 include:
  • Based on first electronic profile data associated with a first device, automatically causing an action to be taken with respect to a second device.
  • The action is based on an electronic association between the first and second device identifiers.
  • The electronic association is based on the connection, before the action, of each device to a "common local area network."
  • The computer system performing the method is connected to the local area network through the Internet but is not part of the local area network itself.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,671,139 - "media properties selection method and system based on expected profit from profile-based ad delivery"

• Patent Identification: U.S. Patent No. 8,671,139, titled "media properties selection method and system based on expected profit from profile-based ad delivery," issued March 11, 2014 (the "’139 Patent"). (Compl. ¶30).

Technology Synopsis

The patent describes a system for selecting where to place an online advertisement based on calculating the expected profit. The system analyzes a user's profile information and determines whether the potential revenue from showing a targeted ad on a particular third-party website will exceed the cost of the ad space. If a positive profit is anticipated, the system arranges for the user to be "tagged" for future ad delivery on that selected website. (’139 Patent, Abstract).

Asserted Claims

The complaint asserts infringement of the independent claims of the ’139 Patent, which are claims 1, 19, and 37. (Compl. ¶35).

Accused Features

The complaint accuses Microsoft's advertising platform, alleging that its functions for selecting media properties and delivering profile-based ads infringe the patent. (Compl. ¶31).

U.S. Patent No. 7,822,639 - "added-revenue off-site targeted internet advertising"

• Patent Identification: U.S. Patent No. 7,822,639, titled "added-revenue off-site targeted internet advertising," issued October 26, 2010 (the "’639 Patent"). (Compl. ¶40).

Technology Synopsis

The patent discloses a "super-saturation" method for generating advertising revenue after a primary, high-value website has sold all of its available ad inventory. The method allows the primary website to sell access to its audience by having advertisements delivered to its certified users when they visit other, less expensive third-party websites. A facilitator system identifies the primary website's users on the secondary sites and delivers the "off-site" targeted ad. (’639 Patent, Abstract).

Asserted Claims

The complaint asserts infringement of the independent claims of the ’639 Patent, which are claims 1 and 24. (Compl. ¶45).

Accused Features

The complaint accuses Microsoft's advertising platform, suggesting its features that enable publishers to sell access to their audiences on third-party properties (a practice known as audience extension) infringe the patent. (Compl. ¶41).

III. The Accused Instrumentality

Product Identification

• The accused instrumentalities are identified as "Microsoft's advertising platform" and products from its subsidiary, "Xandr, Inc." (collectively, the "Accused Products"). (Compl. ¶¶1, 10, 20).

Functionality and Market Context

• The complaint alleges that the Accused Products constitute an "extensive suite of industry-leading targeted advertising solutions" covering "profile based bidding, behavioral targeting, online and offline data monetization, addressable advertising, and multi-platform advertising." (Compl. ¶2). Microsoft’s acquisition of Xandr was allegedly to "accelerate the delivery of our digital advertising solutions." (Compl. ¶4, n.2). The complaint does not provide sufficient detail for analysis of the specific technical operation of the accused platform's features. No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits that are not provided in the filed document. The infringement theories are therefore summarized from the complaint’s narrative allegations.

• ’582 Patent Infringement Allegations
  The complaint alleges that Microsoft's advertising platform infringes the ’582 Patent by collecting descriptive profile data about users from various third-party sources, adding that data to a maintained profile, and using the combined profile to target advertisements. (Compl. ¶¶10, 15). The complaint does not, however, specify the technical mechanism by which the platform receives this data from third parties, a key element of the asserted claim.

• Identified Points of Contention (’582 Patent):

  • Technical Question: What evidence does the complaint provide that the accused platform utilizes an "automatic electronic URL redirection" from third-party websites to receive profile data, as specifically required by claim 1?
  • Scope Question: Does the platform's method of data aggregation create and store an "electronic record of which of the plurality of unaffiliated third parties contributed" specific profile attributes, or does it simply ingest data into a commingled profile, potentially creating a mismatch with the claim language?

• ’398 Patent Infringement Allegations
  The complaint alleges that Microsoft's advertising platform infringes the ’398 Patent by tracking user activity on one network-connected device (e.g., a personal computer) and using that information to deliver targeted advertising to a different device (e.g., a smart TV) that is connected to the same network. (Compl. ¶¶20, 25). The complaint does not detail the method by which the platform determines that two distinct devices are connected to a "common local area network."

• Identified Points of Contention (’398 Patent):

  • Technical Question: What specific technical method does the accused platform employ to establish an "electronic association" between two different devices, and how does it verify they are on a "common local area network"?
  • Scope Question: Can the claim term "common local area network" be construed to read on the industry practice of associating devices that merely share a single public-facing IP address, or does the patent require a more direct method of determining the private network topology?

V. Key Claim Terms for Construction

• Term (’582 Patent): "automatic electronic URL redirection"

  • Context and Importance: This term defines a specific mechanism for data transfer. The infringement analysis may turn on whether the various methods used by modern ad platforms to collect data from third parties (e.g., pixel tags, API calls, server-to-server data transfers) fall within the scope of this term. Practitioners may focus on this term because it appears to recite a specific, and potentially outdated, technical implementation for data collection.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patent family describes a redirect as a means by which a visitor's browser can report a cookie to a server, which may suggest that "URL redirection" is an exemplary, rather than exclusive, method of causing a user's device to communicate with the system. (’582 Patent, col. 3:60-65).
    • Evidence for a Narrower Interpretation: The plain language of the claim recites "URL redirection," which in a technical context typically refers to a specific HTTP response (e.g., a 302 redirect). This could support an argument that the term does not cover other data transfer protocols that do not involve redirecting the user's browser.

• Term (’398 Patent): "common local area network"

  • Context and Importance: This term is the lynchpin for the patent's cross-device association method. The case may depend on whether inferring a relationship between devices based on their shared use of a public IP address satisfies this limitation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification explains that a router connects a local area network (LAN) to the Internet, allowing multiple devices to share that connection. This context could support an interpretation that any group of devices operating behind a single router and sharing a public IP address constitutes a "common local area network" from the perspective of an outside server. (’398 Patent, col. 2:60-67).
    • Evidence for a Narrower Interpretation: The term "local area network" has a specific technical meaning that typically refers to a private network (e.g., using 192.168.x.x addresses). An argument could be made that merely observing traffic from the same public IP address is insufficient to prove the devices are on a "common local area network," as this could also occur on a large corporate or public Wi-Fi network.

VI. Other Allegations

• Indirect Infringement: The complaint alleges that Defendant induces infringement by providing "user manuals and online instruction materials on its website" that encourage and instruct customers to use the Accused Products in an infringing manner. (Compl. ¶¶13, 23). It also makes allegations of contributory infringement. (Compl. ¶¶14, 24).
• Willful Infringement: Willfulness is alleged for the ’582 and ’398 patents. The complaint bases this allegation on Defendant’s alleged pre-suit knowledge of the patent families, asserting that Microsoft cited applications related to the patents-in-suit during the prosecution of its own patents. (Compl. ¶¶12, 22).

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

• A central evidentiary question will be one of technical proof: Can the Plaintiff demonstrate that Microsoft's complex advertising platform practices the specific technical steps recited in the claims, such as "automatic electronic URL redirection" (’582 Patent) and association based on a "common local area network" (’398 Patent), given the high-level and non-specific nature of the complaint’s allegations?
• A core legal issue will be one of definitional scope: Can the claim terms, rooted in the technology of the late 1990s and 2000s, be construed to cover the different and more varied technical implementations used in modern, sophisticated advertising platforms, or is there a fundamental mismatch between the claimed invention and the accused technology?
• A key issue for damages will be willfulness: Does the citation of a patent family in the prosecution history of a defendant's own patents constitute the "knowledge of the patent" required to support a claim of willful infringement, and if so, was the defendant's subsequent conduct objectively reckless?