DCT

6:24-cv-00165

Advanced Transactions LLC v. Crunch LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 6:24-cv-00165, W.D. Tex., 03/29/2024
  • Venue Allegations: Venue is alleged to be proper based on Defendant having regular and established places of business in the district (including at least 24 fitness centers in Texas), committing acts of infringement in the district, and employing residents of the district.
  • Core Dispute: Plaintiff alleges that Defendant’s digital marketing systems, including its marketing emails, mobile applications, and website, infringe eight patents related to email campaign management, mobile commerce, and global e-commerce systems.
  • Technical Context: The technologies at issue relate to foundational methods of digital customer engagement, including personalized email marketing, mobile rewards programs, and localized e-commerce experiences.
  • Key Procedural History: Plaintiff alleges it sent Defendant a notice letter including a draft of the complaint on or about February 10, 2023, acquainting Defendant with the patents-in-suit and inviting licensing discussions. Plaintiff alleges that subsequent discussions did not result in a resolution, forming the basis for its willful infringement claims.

Case Timeline

Date Event
2000-04-25 Earliest Priority Date ('’555, '’594, '’950 Patents)
2000-04-27 Earliest Priority Date ('’736 Patent)
2000-10-06 Earliest Priority Date ('’057, '’519, '’608, '’529 Patents)
2006-06-20 U.S. Patent No. 7,065,555 Issues
2008-06-10 U.S. Patent No. 7,386,594 Issues
2010-04-06 U.S. Patent No. 7,693,950 Issues
2011-07-12 U.S. Patent No. 7,979,057 Issues
2012-04-03 U.S. Patent No. 8,150,736 Issues
2012-05-08 U.S. Patent No. 8,175,519 Issues
2017-08-29 U.S. Patent No. 9,747,608 Issues
2020-09-22 U.S. Patent No. 10,783,529 Issues
2023-02-10 Plaintiff sends pre-suit notice letter to Defendant (approx. date)
2024-03-29 Complaint Filed

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

U.S. Patent No. 7,065,555 - “System and Method Related to Generating and Tracking an Email Campaign”

  • Issued: June 20, 2006

The Invention Explained

  • Problem Addressed: The patent’s background section describes difficulties with then-existing email marketing campaigns, including tailoring messages for large audiences and measuring the success of a campaign by determining whether recipients received the email and providing feedback mechanisms (Compl. ¶31; ’555 Patent, col. 1:15-43).
  • The Patented Solution: The invention proposes an efficient system to create and track an email campaign by generating an "email campaign template" from a target database, creating a "custom email" for each target from that template, sending the custom emails, and then tracking responses (Compl. ¶32; ’555 Patent, col. 1:44-45, col. 2:47-52). This allows for personalized mass emails where recipient-specific data is inserted into a message template (Fig. 3A; ’555 Patent, col. 5:21-40).
  • Technical Importance: The technology sought to systematize and scale personalized digital marketing, moving beyond generic mass emails to customized, trackable communications (Compl. ¶31).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶104).
  • Claim 1 breaks down into the essential elements of a method for conducting an email campaign:
    • Receiving an email target database.
    • Generating an email campaign template related to at least one email target in the database.
    • Sending a corresponding custom email to each of the at least one email targets, where the custom email is formed from the campaign template.
    • Tracking the sent custom email.
  • The complaint does not explicitly reserve the right to assert dependent claims for the ’555 Patent.

U.S. Patent No. 7,386,594 - “System and method related to generating an email campaign”

  • Issued: June 10, 2008

The Invention Explained

  • Problem Addressed: The specification, which is substantially similar to that of the ’555 patent, addresses the need for an efficient way to create and track email campaigns, overcoming challenges in personalizing messages and measuring campaign success (’594 Patent, col. 1:15-45; Compl. ¶39).
  • The Patented Solution: The invention provides a method where an email campaign template is generated from a target database, data related to each target is inserted into a message template to form a custom email, and those custom emails are sent to the targets (’594 Patent, col. 2:47-52, col. 5:19-42). This allows for scalable personalization of marketing emails.
  • Technical Importance: This system provided a structured approach to automate personalized mass-email campaigns, a key development in early digital marketing (Compl. ¶31).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶115).
  • Claim 1 breaks down into the essential elements of a method for conducting an email campaign:
    • Receiving an email target database.
    • Generating an email campaign template related to at least one email target, wherein generating the template comprises generating a message template and a configuration file with data for each target.
    • Sending a corresponding custom email formed from the campaign template to each target.
  • The complaint does not explicitly reserve the right to assert dependent claims for the ’594 Patent.

Multi-Patent Capsules

  • Patent Identification: U.S. Patent No. 7,693,950, “System and Method Related to Generating and Tracking an Email Campaign,” issued April 6, 2010.

  • Technology Synopsis: The patent, sharing a specification with the ’555 and ’594 patents, discloses a method for producing a custom email template. The system receives email addresses for target recipients and produces a template comprising a configuration file (containing data for each recipient) and a message file (containing the textual message) (Compl. ¶¶ 44, 126-131).

  • Asserted Claims: Independent claim 21 is asserted (Compl. ¶125).

  • Accused Features: The complaint alleges that Crunch’s email marketing system, including its email servers, infringes by producing custom email templates for its marketing campaigns (Compl. ¶126).

  • Patent Identification: U.S. Patent No. 7,979,057, “Third-Party Provider Method and System,” issued July 12, 2011.

  • Technology Synopsis: This patent addresses problems with traditional paper coupons, such as low and dropping redemption rates and fraud, by disclosing a method for processing negotiable economic credits (e.g., coupons, rewards) on a wireless handheld device like a PDA or smartphone. The system involves storing a filter on the device, receiving credits from a wireless network based on that filter, and storing and retrieving those credits on the device (Compl. ¶¶ 51, 54, 136-141; ’057 Patent, col. 2:28-57).

  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶135).

  • Accused Features: The complaint accuses Crunch’s mobile apps, which allegedly process "Crunch Coupons, Crunch Rewards, Crunch Payment Wallet, Crunch Gift Cards, etc." on smartphones (Compl. ¶136). The screenshot of the Crunch Fitness app's "Rewards" tab is provided as evidence (Compl. p. 108).

  • Patent Identification: U.S. Patent No. 8,150,736, “Global Electronic Commerce System,” issued April 3, 2012.

  • Technology Synopsis: The patent describes a "Global Store" system designed to overcome barriers to global e-commerce like language and culture. The system uses a computing system to receive a web page request that includes a "locale identifier value" (e.g., referencing a geographic location and language from a referral website), retrieves a version of marketing information based on that locale, and generates a web page with the locale-specific information (Compl. ¶¶ 63-64, 152-155; ’736 Patent, col. 1:27-43).

  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶151).

  • Accused Features: The complaint accuses the Crunch website, which allegedly provides location-specific content (e.g., for its Waco, TX location) based on user selection or location data, of infringing the patent (Compl. ¶¶ 152-155). A screenshot of the website's location finder is used to support this allegation (Compl. p. 146).

  • Patent Identification: U.S. Patent No. 8,175,519, “Third-Party Provider Method and System,” issued May 8, 2012.

  • Technology Synopsis: Sharing a specification with the '057 patent, this patent discloses a method for managing negotiable economic credits on a wireless handheld device. It involves requesting, receiving, storing, retrieving, and sending credits using the device, and receiving a message indicating the credit was utilized (Compl. ¶¶ 80, 160-165).

  • Asserted Claims: Independent claim 22 is asserted (Compl. ¶159).

  • Accused Features: The complaint accuses Crunch’s mobile apps and associated rewards programs of infringing by allowing users to request, receive, and use rewards and other credits on their smartphones (Compl. ¶160).

  • Patent Identification: U.S. Patent No. 9,747,608, “Third-Party Provider Method and System,” issued August 29, 2017.

  • Technology Synopsis: Sharing a specification with the '057 and '519 patents, this patent discloses a method where an electronic portable device transmits a request for a data structure (representing a negotiable economic credit) to a computer system and receives it. The device then detects a transaction and transmits the credit information to a point-of-sale (POS) device to be applied (Compl. ¶¶ 86, 170-174).

  • Asserted Claims: Independent claim 10 is asserted (Compl. ¶169).

  • Accused Features: The Crunch mobile apps are accused of infringement, allegedly by enabling users to request and receive rewards that can then be used at Crunch retail locations (Compl. ¶170).

  • Patent Identification: U.S. Patent No. 10,783,529, “Third-Party Provider Method and System,” issued September 22, 2020.

  • Technology Synopsis: Sharing a specification with the '057, '519, and '608 patents, this patent discloses a method for storing a data structure representing a negotiable economic credit on an electronic portable device. The method includes detecting a user-initiated transaction and transmitting the credit information to a POS device for application (Compl. ¶¶ 92, 185-188).

  • Asserted Claims: Independent claim 8 is asserted (Compl. ¶184).

  • Accused Features: The Crunch mobile apps are accused of infringement by allegedly storing and transmitting rewards/coupons for use in transactions at Crunch locations (Compl. ¶185).

III. The Accused Instrumentality

  • Product Identification: The complaint collectively accuses the "Crunch Marketing Products and Services" and the underlying "Crunch Marketing System" (Compl. ¶¶ 14, 15). These include Crunch Marketing Emails, Crunch Mobile Apps (for iOS and Android), the Crunch website, online and in-store shopping services, and the Crunch Rewards program (Compl. ¶14).
  • Functionality and Market Context: The accused instrumentalities are alleged to form a comprehensive digital marketing and customer engagement platform for Crunch’s fitness club business (Compl. ¶19). The complaint alleges the system collects user data through website forms (e.g., for a free trial) to build a marketing database (Compl. ¶106). This database is then allegedly used to send personalized marketing emails with custom templates and tracking codes (Compl. ¶¶ 105, 107, 111). The mobile applications are alleged to provide features for managing negotiable economic credits like coupons and rewards, which can be used in transactions at Crunch’s physical locations (Compl. ¶¶ 136, 160). A screenshot from the Crunch Fitness app shows a "Rewards" tab, which currently displays "No Deals" but indicates rewards are a feature of the app (Compl. p. 108). The website is alleged to provide location-specific information, as evidenced by a screenshot of its gym locator page showing numerous Texas locations, including one in Waco (Compl. p. 8).

IV. Analysis of Infringement Allegations

U.S. Patent No. 7,065,555 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A method for conducting an email campaign, said method comprising the steps of: receiving an email target database... The Crunch Marketing System allegedly receives an email target database, for example by collecting user information (name, email) through a free trial sign-up form on its website. A screenshot shows this form for the Waco, TX location (Compl. p. 37). ¶106 col. 5:1-4
generating an email campaign template related to at least one email target in the received email target database... The system is alleged to generate an email campaign template related to the user data in the database. An example marketing email is provided as a visual example of such a template (Compl. p. 33). ¶107 col. 5:21-25
sending to each of the at least one email target a corresponding custom email, wherein the custom email is formed from the email campaign template... Crunch allegedly sends custom emails to targets, with the emails being formed from the generated template and populated with user-specific data. The complaint provides screenshots of such personalized emails as evidence (Compl. p. 33, 35, 38). ¶110 col. 5:43-46
and tracking the custom email sent to each of the at least one email target. The system allegedly tracks the custom emails sent to users, for example through code embedded in the email, to monitor campaign performance. The complaint points to HTML code snippets from emails as evidence of tracking (Compl. p. 50, 59). ¶111 col. 6:4-7

U.S. Patent No. 7,386,594 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A method for conducting an email campaign, said method comprising the steps of: receiving an email target database... The complaint alleges the Crunch Marketing System receives a target database by collecting user data via its website, such as through a free trial form. The complaint includes a screenshot of this online form (Compl. p. 64). ¶117 col. 5:1-4
generating an email campaign template related to at least one email target in the received email target database, wherein said generating comprises: generating a message template; and generating a configuration file... The system is alleged to generate an email campaign template that includes both a message template (the email's visual layout) and a configuration file containing data related to each target (e.g., images, links, text) that is insertable into the message template. ¶¶118-120 col. 5:21-34
sending to each of the at least one email target a corresponding custom email, wherein the custom email is formed from the email campaign template. Crunch allegedly sends custom emails formed from the template to its marketing targets. The complaint provides screenshots of various personalized emails received from the Crunch email server as evidence (Compl. pp. 60, 62, 65). ¶121 col. 5:43-46
  • Identified Points of Contention:
    • Scope Questions: The complaint alleges infringement based on the operation of a modern, web-based marketing system. A potential issue for the court may be how terms from patents with a 2000 priority date, such as "email campaign template" and "configuration file," should be construed in the context of current email marketing technologies (e.g., HTML emails, marketing automation platforms).
    • Technical Questions: For the '555 patent, the complaint alleges the step of "tracking the custom email." The evidence provided consists of HTML image source code snippets from emails (Compl. p. 59). A technical question for the court will be whether these code snippets, often used for open-rate tracking via a tracking pixel, meet the specific "tracking" limitation as it is described and enabled in the patent specification.

V. Key Claim Terms for Construction

  • The Term: "email campaign template" (’555 Patent, Claim 1; ’594 Patent, Claim 1)

  • Context and Importance: This term is central to the infringement allegations for the first three patents. Its construction will define what components and information are required to meet this limitation. Practitioners may focus on this term because the patents describe it as comprising distinct parts (e.g., a "message template" and a "configuration file"), and the dispute may turn on whether the accused Crunch emails embody this specific structure.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification describes the purpose broadly as an "efficient way to create and track a email campaign" (’555 Patent, col. 1:44-45), which may support construing the term to cover any reusable email format used for marketing.
    • Evidence for a Narrower Interpretation: The specification and particularly Figure 3A explicitly depict the template as comprising two distinct files: a "Text Message" file with tags and a separate ".cfg File" with invariant and variant data (’555 Patent, Fig. 3A, col. 5:15-40). This could support a narrower construction requiring a distinct message file and a separate configuration file.

  • The Term: "negotiable economic credit" (’057 Patent, Claim 1; ’529 Patent, Claim 8)

  • Context and Importance: This term is foundational to the infringement allegations against the Crunch mobile apps. The definition will determine whether the "Crunch Rewards" and other digital offers fall within the scope of the claims. Practitioners may focus on this term as the patent links it to traditional instruments like "discount coupons," "frequent flyer miles," and "cash," raising the question of how these concepts apply to modern, often non-transferable, digital loyalty points.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent states the invention relates to "electronic cash, credit, award, incentive, and/or product management" and "enterprise awards, cash, credit, etc." (’529 Patent, col. 1:29-35), suggesting a wide range of digital value representations could be covered.
    • Evidence for a Narrower Interpretation: The background repeatedly analogizes the credits to "discount coupons" that are "physically collected at stores" and processed by a "clearing house" (’529 Patent, col. 2:48-57). This context could support a narrower interpretation requiring the credit to have attributes of traditional, transferable commercial instruments.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges induced infringement for U.S. Patent Nos. 7,979,057 and 9,747,608. The allegations are based on Crunch encouraging and instructing its customers, via its website and other materials, to download and use the Crunch iOS and Android apps in an infringing manner (Compl. ¶¶ 144-148, 177-181).
  • Willful Infringement: Willfulness is alleged for all asserted patents. The claim is based on alleged pre-suit knowledge stemming from a notice letter and draft complaint sent to Crunch on or about February 10, 2023, after which Crunch allegedly continued its infringing activities (Compl. ¶¶ 93, 102).

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

  • A central question of claim scope will be whether the architectural components of an "email campaign template," as described in patents from the early 2000s (e.g., a distinct message file and configuration file), can be construed to read on the integrated code and content of a modern HTML-based marketing email system.
  • A key evidentiary question will be one of technical implementation: does the functionality of the Crunch mobile apps, particularly its "Rewards" program, meet the claim elements for processing "negotiable economic credits," a term rooted in the patent's description of traditional, transferable instruments like paper coupons and frequent flyer miles?
  • A significant procedural question will concern damages and willfulness: given the Plaintiff’s allegation of pre-suit notice in February 2023, the court will need to determine the date from which Defendant had actual knowledge of the patents-in-suit, which will be critical for assessing any potential enhancement of damages.