Patent Armory Inc v. Airbnb Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: Airbnb, Inc. (Delaware)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 6:23-cv-00590, W.D. Tex., 08/14/2023
• Venue Allegations: Venue is alleged to be proper based on Defendant Airbnb, Inc. maintaining an established place of business in the Western District of Texas.
• Core Dispute: Plaintiff alleges that Defendant’s online marketplace platform infringes five U.S. patents related to intelligent communication routing and auction-based systems for matching entities.
• Technical Context: The technology at issue concerns systems for optimizing the connection between two parties, such as a customer and a service agent, by analyzing various characteristics and economic factors, a domain highly relevant to the operation of large-scale online platforms.
• 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. The asserted patents derive from related applications with priority dates spanning from 2002 to 2006.

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

The Invention Explained

• Problem Addressed: The patent’s background section describes inefficiencies in traditional call center management, such as simple first-in, first-out call queuing, and identifies a need for more sophisticated, skill-based routing of communications to agents to improve service quality and resource utilization ( Compl. ¶8; ’420 Patent, col. 2:26-42).
• The Patented Solution: The invention provides a method for matching a “first entity” (e.g., a caller) with a “second entity” (e.g., a call center agent) by performing an “automated optimization” (’420 Patent, Abstract). This optimization considers not only the characteristics of the entities but also the “economic surplus” of a potential match and the “opportunity cost” of making that match, effectively creating an auction-like system to determine the optimal pairing (’420 Patent, col. 22:4-12, Fig. 3).
• Technical Importance: The described approach provides a framework for dynamically allocating resources in a communications environment by treating each potential connection as a micro-economic transaction to be optimized, moving beyond static, rule-based routing systems (’420 Patent, col. 18:8-24).

Key Claims at a Glance

The complaint does not identify specific asserted claims for the ’420 Patent, instead referring to an unprovided exhibit (Compl. ¶17, Ex. 6). For illustrative purposes, the key elements of representative independent method Claim 1 are:

• A method of pairing requests, comprising:
• estimating at least one content-specific or requestor-specific characteristic associated with a request;
• determining a set of available partners, each having at least one respective partner characteristic;
• evaluating, with at least one automated processor, a plurality of pairings of the request with a plurality of different available partners, according to an evaluator for valuing pairings of the request with respective available partners... dependent on the at least one content-specific or requestor-specific characteristic, and the at least one respective partner characteristic; and
• generating a control signal, by the at least one automated processor, selectively dependent on the evaluating.

U.S. Patent No. 10,491,748 - Intelligent communication routing system and method

The Invention Explained

• Problem Addressed: Similar to the ’420 Patent, this patent addresses the technical problem of efficiently managing electronic customer contacts in a call center, aiming to balance high-quality service with the efficient use of resources (’748 Patent, col. 2:24-34).
• The Patented Solution: The invention is a communications routing system that represents both communication sources (e.g., callers) and targets (e.g., agents) by their predicted characteristics and an associated "economic utility" (’748 Patent, Abstract). The system determines an optimal routing between sources and targets by "maximizing an aggregate utility" with respect to these predicted characteristics, moving beyond simple one-to-one matching to a system-wide optimization (’748 Patent, col. 24:28-43).
• Technical Importance: This technology allows a communications system to make routing decisions based on a holistic, utility-maximizing algorithm rather than on static rules, enabling more flexible and economically efficient resource allocation in real-time (’748 Patent, col. 18:9-24).

Key Claims at a Glance

The complaint does not identify specific asserted claims for the ’748 Patent, instead referring to an unprovided exhibit (Compl. ¶26, Ex. 7). For illustrative purposes, the key elements of representative independent system Claim 19 are:

• A system for pairing requests, comprising:
• at least one port, configured to receive a request and information identifying a content or requestor-related characteristic;
• at least one memory, configured to store availability information for a plurality of partners, and at least one respective partner characteristic; and
• at least one automated processor, configured to generate a control signal, selectively dependent on an evaluation of each of a plurality of pairings of the request with a plurality of different available partners, dependent on at least one probabilistic function of the characteristics.

U.S. Patent No. 7,023,979 - Telephony control system with intelligent call routing

• Technology Synopsis: This patent describes a communications management system designed for intelligent call routing (’979 Patent, Abstract). The system receives a communication classification, accesses a database of agent skill scores and a database of skill weights, and uses a processor to compute an optimal agent selection, directly controlling the routing of the call (’979 Patent, Abstract, col. 2:50-65).
• Asserted Claims: The complaint does not specify asserted claims, referring instead to an unprovided exhibit (Compl. ¶35, Ex. 8).
• Accused Features: The complaint alleges that unspecified “Defendant products” infringe the patent but does not identify particular accused features, incorporating all such allegations by reference to an unprovided exhibit (Compl. ¶30, Ex. 8).

U.S. Patent No. 7,269,253 - Telephony control system with intelligent call routing

• Technology Synopsis: This patent, sharing a title and specification with the ’979 Patent, discloses a system and method for intelligent call routing in a telephony environment (’253 Patent, Abstract). It involves receiving communications with associated classifications, storing characteristics of potential targets (e.g., agents), and performing a combinatorial optimization to determine the optimal target for each communication before routing the call (’253 Patent, Abstract, col. 2:50-65).
• Asserted Claims: The complaint does not specify asserted claims, referring instead to an unprovided exhibit (Compl. ¶41, Ex. 9).
• Accused Features: The complaint alleges that unspecified “Defendant products” infringe the patent but does not identify particular accused features, incorporating all such allegations by reference to an unprovided exhibit (Compl. ¶39, Ex. 9).

U.S. Patent No. 9,456,086 - Method and system for matching entities in an auction

• Technology Synopsis: This patent, related to the ’420 Patent, describes a method for matching a first entity with a second entity selected from a plurality of alternatives (’086 Patent, Abstract). The matching is determined by an automated optimization that considers the "economic surplus" of a potential match and the "opportunity cost" of forgoing other potential matches for the second entity, thereby creating an auction-based framework for pairing (’086 Patent, Abstract, col. 2:48-67).
• Asserted Claims: The complaint does not specify asserted claims, referring instead to an unprovided exhibit (Compl. ¶50, Ex. 10).
• Accused Features: The complaint alleges that unspecified “Defendant products” infringe the patent but does not identify particular accused features, incorporating all such allegations by reference to an unprovided exhibit (Compl. ¶45, Ex. 10).

III. The Accused Instrumentality

• Product Identification: The complaint identifies the accused instrumentalities as “Defendant products” and “Exemplary Defendant Products” (Compl. ¶15, ¶21, ¶30, ¶39, ¶45).
• Functionality and Market Context: The complaint does not provide sufficient detail for analysis of the functionality of the accused "Defendant products." All detailed allegations regarding the technical operation of the accused products are incorporated by reference to unprovided exhibits (e.g., Compl. ¶17-18, Ex. 6; Compl. ¶26-27, Ex. 7). No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint alleges infringement of the ’420 and ’748 Patents but provides no narrative infringement theory in the body of the complaint. Instead, it incorporates by reference claim charts from unprovided exhibits (Compl. ¶17-18, Ex. 6; Compl. ¶26-27, Ex. 7). A formal claim chart summary cannot be prepared from the provided documents.

• Identified Points of Contention: Based on the asserted patents and the general nature of Defendant's business as an online marketplace, several points of contention may arise.
  • Scope Questions: A primary question may be whether the term “auction” as described in the ’420 and ’086 Patents, which includes considerations of “economic surplus” and “opportunity cost,” can be construed to read on the algorithm Defendant uses to match prospective guests with hosts. A similar question arises for the ’748, ’979, and ’253 Patents: does Defendant’s platform function as a “communications routing system” that routes a “call” or “communication” (e.g., a user query) to a “target” (e.g., a property listing)?
  • Technical Questions: A central evidentiary question will be whether Defendant’s platform, in operation, actually performs the specific multi-factor optimizations required by the patent claims. For example, what evidence demonstrates that Defendant’s matching algorithm calculates an “opportunity cost” associated with making a specific host unavailable for other potential guests, as may be required by claims of the ’420 and ’086 Patents?

V. Key Claim Terms for Construction

• The Term: “automated optimization with respect to an economic surplus ... and an opportunity cost” (from the ’420 and ’086 Patents).

• Context and Importance: This phrase encapsulates the core technical concept of the auction-based matching patents. The definition of each component—“automated optimization,” “economic surplus,” and “opportunity cost”—will be critical to determining infringement, as the Plaintiff will need to prove that Defendant’s system performs a process meeting all parts of this definition.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification describes these concepts in abstract, high-level terms, which may support an interpretation not strictly limited to the call-center environment (e.g., ’420 Patent, col. 22:4-12).
  • Evidence for a Narrower Interpretation: The patent’s detailed description and examples are heavily rooted in the economics of a call center, referencing factors like agent salaries, training costs, and call durations, which could be cited to argue for a narrower construction limited to that technical context (’420 Patent, col. 24:1-30).

• The Term: “communications routing system” (from the ’748, ’979, and ’253 Patents).

• Context and Importance: This term defines the statutory class of the claimed invention. Whether Defendant’s online marketplace platform is a “communications routing system” will be a threshold question for infringement.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claims use general terms like “entities,” “sources,” and “targets,” which may support an interpretation that extends beyond traditional telephony to any system that connects one party with another based on data (’748 Patent, Abstract).
  • Evidence for a Narrower Interpretation: The patent specifications consistently frame the invention in the context of a “call center” and “telephony,” using associated terminology throughout. A defendant may argue that this consistent usage limits the scope of the claims to that specific technological field (’748 Patent, col. 1:26-28, col. 2:24-34).

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement of the ’748, ’979, and ’086 Patents. The stated factual basis is Defendant’s distribution of “product literature and website materials inducing end users and others to use its products in the customary and intended manner that infringes” the patents (Compl. ¶24, ¶33, ¶48).
• Willful Infringement: The complaint does not use the term “willful.” However, for the ’748, ’979, and ’086 Patents, it alleges “Actual Knowledge of Infringement” based on the service of the complaint and its associated (but unprovided) claim charts (Compl. ¶23, ¶32, ¶47). These allegations may form the basis for a claim of post-suit willful infringement.

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

• A core issue will be one of definitional scope: can the patent claims, which are described and exemplified almost exclusively in the technical context of telephony and call centers, be construed broadly enough to cover the fundamentally different application of matching users and listings on a global online marketplace? The outcome will likely depend on the construction of key terms such as “auction,” “communications routing system,” and “economic surplus.”
• A second key question will be one of evidentiary sufficiency: The complaint makes conclusory allegations of infringement that rely entirely on unprovided exhibits. A central issue for the case going forward will be whether discovery uncovers evidence that Defendant's platform actually performs the specific, multi-part technical and economic optimizations recited in the asserted claims, or if there is a functional mismatch.