DCT

6:24-cv-00340

PayRange Inc v. Nayax

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: PayRange Inc. v. Nayax Ltd., 6:24-cv-00340, W.D. Tex., 06/24/2024
  • Venue Allegations: Venue is alleged to be proper because the Defendant is a foreign entity, which may be sued in any judicial district under 28 U.S.C. § 1391(c)(3).
  • Core Dispute: Plaintiff alleges that Defendant’s payment modules and mobile wallet application for unattended retail machines infringe four patents related to enabling mobile payments on such machines.
  • Technical Context: The technology enables legacy, offline, coin-operated machines, such as those used for laundry and vending, to be retrofitted with hardware modules that accept payments from a user's smartphone app.
  • Key Procedural History: The complaint notes that Plaintiff previously litigated its patents against competitor KioSoft, resulting in a licensing settlement valued at up to $62 million. It also states that Plaintiff's patents survived validity challenges at the Patent Trial and Appeal Board (PTAB). Plaintiff alleges it provided Defendant with pre-suit notice of infringement, including detailed claim charts, on March 20, 2024. On November 22, 2023, Plaintiff filed a disclaimer for several claims of U.S. Patent No. 11,481,772.

Case Timeline

Date Event
2013-12-18 Earliest Patent Priority Date (Provisional No. 61/917,936)
2021-01-12 U.S. Patent No. 10,891,608 Issues
2022-10-25 U.S. Patent No. 11,481,772 Issues
2023-11-22 Disclaimer filed for claims of the '772 Patent
2024-01-31 Plaintiff announces settlement with KioSoft
2024-03-20 Plaintiff sends notice letter to Defendant
April 2024 Plaintiff resolves dispute with KioSoft's customer CSC
2024-04-23 U.S. Patent No. 11,966,920 Issues
2024-04-30 U.S. Patent No. 11,972,423 Issues
May 2024 Plaintiff reaches licensing deal with WASH
2024-06-24 Complaint Filed

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

U.S. Patent No. 10,891,608 - “METHOD AND SYSTEM FOR AN OFFLINE-PAYMENT OPERATED MACHINE TO ACCEPT ELECTRONIC PAYMENTS”

  • Patent Identification: U.S. Patent No. 10,891,608, titled “METHOD AND SYSTEM FOR AN OFFLINE-PAYMENT OPERATED MACHINE TO ACCEPT ELECTRONIC PAYMENTS,” issued January 12, 2021 (the “’608 Patent”).

The Invention Explained

  • Problem Addressed: The patent describes the technical challenge of enabling traditional, offline, coin-operated machines (e.g., vending machines, laundromat washers) to accept modern electronic payments without requiring a costly or complex overhaul or a persistent network connection at the machine itself (’608 Patent, col. 1:35-52).
  • The Patented Solution: The invention is a payment module designed to be installed within an offline machine. The module receives a wireless payment request from a user's mobile device and, in response, generates a specific sequence of electrical pulses that it sends to the machine's existing control unit. This sequence of pulses emulates the analog signal that the machine's control unit would normally receive from its coin-accepting mechanism, thereby tricking the machine into initiating its operation as if physical coins had been inserted (’608 Patent, Abstract; col. 2:53-62).
  • Technical Importance: This approach provided a method for affordably retrofitting the large installed base of legacy offline machines to accept mobile payments, bypassing the need for expensive hardware replacement or dedicated network infrastructure at each machine (Compl. ¶5; ’608 Patent, col. 6:1-6).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶27).
  • The essential elements of claim 1, a payment module, include:
    • A short-range wireless transceiver configured to communicate with mobile devices.
    • One or more processors.
    • A first interface module configured to output electrical pulses to the control unit of an offline machine, where each pulse emulates an analog signal from the machine's coin receiving switch.
    • Memory storing instructions that, when executed, cause the processor(s) to:
      • Store the number of electrical pulses needed to initiate an operation.
      • Receive a wireless request from a mobile device to initiate a cashless operation.
      • In response to the request, determine a number of electrical pulses to output.
      • Cause the machine to initiate the operation by issuing the determined pulses via the interface module.
      • Send operation information back to the mobile device.
  • The complaint reserves the right to assert additional claims (Compl. ¶27).

U.S. Patent No. 11,966,920 - “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS”

  • Patent Identification: U.S. Patent No. 11,966,920, titled “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS,” issued April 23, 2024 (the “’920 Patent”).

The Invention Explained

  • Problem Addressed: The patent addresses the user experience challenges of mobile payment systems in environments with multiple unattended machines, such as identifying the correct machine and clearly understanding the transaction status on the mobile device's screen (’772 Patent, col. 1:12-28, which shares a specification with the ’920 Patent).
  • The Patented Solution: The invention is a mobile device system that identifies nearby payment-accepting units based on a broadcasted identifier, displays a visual representation of those units on the device's screen, and accepts user input to select a specific unit and trigger payment. The system then establishes a wireless communication path, allows the user to complete the transaction, exchanges information with the machine, and displays an updated user interface reflecting the transaction's outcome (’920 Patent, Abstract).
  • Technical Importance: This technology aims to provide a clear and intuitive user interface flow for mobile payments at unattended machines, which the complaint alleges was not a routine or conventional approach (Compl. ¶37).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶38).
  • The essential elements of claim 1, a mobile device, include:
    • A display, one or more radio transceivers, and one or more processors.
    • Memory storing instructions that, when executed, cause the processor(s) to:
      • Identify one or more available payment accepting units based on an identifier.
      • Display a user interface with a visual indication of the payment accepting unit(s).
      • Accept user input to select a unit and trigger payment.
      • Establish a wireless communication path with the selected unit.
      • Enable user interaction with the user interface to complete the transaction.
      • Exchange information with the unit during the transaction.
      • Display an updated user interface after exchanging information.
  • The complaint reserves the right to assert additional claims (Compl. ¶38).

Multi-Patent Capsule: U.S. Patent No. 11,972,423 - “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS”

  • Patent Identification: U.S. Patent No. 11,972,423, titled “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS,” issued April 30, 2024 (the “’423 Patent”).
  • Technology Synopsis: Similar to the ’920 Patent, this patent relates to the system and method on a mobile device for interacting with payment-accepting units. The invention centers on identifying available units via a corresponding identifier, displaying a visual indication of those units for user selection, and managing the wireless communication and user interface updates required to complete a transaction (Compl. ¶48).
  • Asserted Claims: The complaint asserts at least independent claim 1 (Compl. ¶49).
  • Accused Features: The complaint accuses the Nayax "Monyx Wallet app" of infringing the ’423 Patent (Compl. ¶49).

Multi-Patent Capsule: U.S. Patent No. 11,481,772 - “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS”

  • Patent Identification: U.S. Patent No. 11,481,772, titled “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS,” issued October 25, 2022 (the “’772 Patent”).
  • Technology Synopsis: This patent describes an improved user interface on a mobile device that displays multiple available payment-accepting units for user selection. The invention claims as unconventional the specific manner in which the mobile application shows available units, prepared balance, and an indication of transaction initiation, information that was not previously easily accessible to users on their mobile devices (Compl. ¶¶59-60).
  • Asserted Claims: The complaint asserts independent claim 11 (Compl. ¶61).
  • Accused Features: The complaint accuses Nayax "products with mobile payment functionality" of infringing the ’772 Patent, referencing the "Monyx Wallet" in its associated inducement allegations (Compl. ¶¶ 61, 63).

III. The Accused Instrumentality

  • Product Identification: The complaint identifies two categories of accused instrumentalities:
    1. Defendant’s payment devices, specifically the "VPOS Touch and Onyx" models (Compl. ¶27).
    2. Defendant’s mobile application, the "Monyx Wallet app," and its associated mobile payment functionality (Compl. ¶¶ 38, 49, 63).
  • Functionality and Market Context:
    • The complaint alleges that the VPOS Touch and Onyx devices are payment modules installed in offline machines like vending machines. These modules are alleged to include a short-range wireless transceiver (e.g., NFC) to communicate with mobile devices and an interface module that outputs electrical pulses to the machine's control unit to enable a cashless transaction (Compl. ¶28).
    • The Monyx Wallet app is alleged to be a mobile payment application that allows users to find and pay at machines equipped with Defendant's hardware (Compl. ¶¶ 38, 49).
    • The complaint frames the accused products as part of a competitive landscape where Plaintiff had already achieved significant success, suggesting the Defendant's products compete directly with Plaintiff's "BluKey" module and mobile app (Compl. ¶¶ 5, 7).

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references Exhibit 6, which it states contains element-by-element claim charts for the asserted patents; however, this exhibit was not provided with the complaint. The infringement theory is summarized below based on the narrative allegations in the complaint.

  • ’608 Patent Infringement Allegations:
    The complaint alleges that when Defendant's VPOS Touch and Onyx devices are placed into operation, they directly infringe at least claim 1 of the ’608 Patent. The narrative infringement theory in the complaint closely tracks the language of claim 1, alleging that the accused devices constitute a "payment module" containing a short-range wireless transceiver (e.g., NFC), a processor, memory, and a "first interface module" that outputs electrical pulses to emulate the signal of a coin switch. The complaint further alleges that the software on these devices is programmed to receive a wireless request from a mobile device and, in response, cause the machine to operate by issuing the emulated electrical pulses (Compl. ¶28).

  • ’920 Patent Infringement Allegations:
    The complaint alleges that Defendant's Monyx Wallet app infringes at least claim 1 of the ’920 Patent. While a detailed narrative is not provided, the infringement theory appears to be that the Monyx Wallet app, when operating on a mobile device, meets the limitations of a mobile device system as claimed. This includes the app's functionality for identifying nearby payment-accepting units, displaying them on the mobile device's screen for user selection, establishing a wireless connection to the selected unit to conduct a transaction, and updating the user interface to reflect the transaction's status (Compl. ¶¶ 37-39).

  • Identified Points of Contention:

    • Technical Questions: For the ’608 patent, a central question may be whether the accused VPOS Touch and Onyx devices actually function by "emulating an analog signal generated by the coin receiving switch." The analysis will depend on the specific electrical signals the accused devices send to the host machine's control unit and how that compares to the signals described and claimed in the patent.
    • Scope Questions: For the ’920 patent, the infringement analysis may raise questions about the scope of terms like "identifying" a payment unit "based at least in part on an identifier." The dispute could turn on whether the method used by the Monyx Wallet app to locate and communicate with machines falls within a proper construction of this claim language, which the patent specification suggests involves detecting a broadcasted module ID (’608 Patent, col. 28:41-44).

V. Key Claim Terms for Construction

  • For the ’608 Patent:

    • The Term: "emulating an analog signal generated by the coin receiving switch" (from claim 1).
    • Context and Importance: This term is central to the claimed invention's mechanism of action. Whether the accused devices infringe will likely depend on how broadly or narrowly this term is construed. Practitioners may focus on this term because it defines the core technical novelty asserted by the patent—making a legacy machine accept a mobile payment by mimicking its original coin-based input.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification describes the invention's purpose as causing an offline machine "to perform the requested transaction" by issuing a signal, which may support a functional interpretation where any signal that achieves this result meets the limitation (’608 Patent, col. 2:53-62).
      • Evidence for a Narrower Interpretation: The specification provides specific examples of emulating a signal sequence, including details on pulse count, amplitude, and shape, as depicted in Figure 28B. This could support a narrower construction requiring the electrical pulses to more closely replicate the specific characteristics of a physical coin switch signal (’608 Patent, col. 40:51-64).

  • For the ’920 Patent:

    • The Term: "identifying one or more payment accepting units ... based at least in part on an identifier" (from claim 1).
    • Context and Importance: The definition of this term is critical because it dictates how the accused mobile app must become aware of a nearby machine to fall within the claim. If Nayax's Monyx Wallet app uses a different method of identification (e.g., exclusively relying on user-scanned QR codes or manual list selection), it might not infringe.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The phrase "based at least in part on" suggests that the "identifier" does not have to be the sole means of identification, potentially allowing for systems that combine an identifier with other data, like GPS location.
      • Evidence for a Narrower Interpretation: The shared patent specification frequently describes a specific embodiment where the payment module broadcasts its "module ID" via a short-range signal, which the mobile device then detects. This embodiment could be used to argue for a narrower construction limited to identification via a wirelessly received hardware identifier (’608 Patent, col. 28:41-44; Fig. 24A).

VI. Other Allegations

  • Indirect Infringement: The complaint alleges active inducement for all asserted patents, claiming Defendant encourages its customers and partners to use the accused products in an infringing manner with specific intent to cause infringement (Compl. ¶¶ 29, 40, 51, 63). It also alleges contributory infringement for the ’608, ’920, and ’423 patents, asserting that the accused products are material components of the patented inventions and are especially made or adapted for an infringing use (Compl. ¶¶ 30, 41, 52).
  • Willful Infringement: The complaint alleges that Defendant had pre-suit knowledge of the patents and its infringement. This allegation is based on a notice letter, which included claim charts, sent by Plaintiff to Defendant on March 20, 2024. For the ’920 and ’423 patents, notice is alleged to have been provided even before those patents issued. These allegations form the basis for the request for enhanced damages for willful infringement (Compl. ¶¶ 13, 44, 55; Prayer for Relief ¶e).

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

  • A core issue will be one of technical mechanism: For the ’608 patent, does the accused Nayax hardware interface with host machines by "emulating an analog signal generated by the coin receiving switch," as the claim requires, or does it use a distinct and non-infringing communication protocol to trigger a cashless vend?
  • A second central question will be one of definitional scope: For the ’920, ’423, and ’772 patents, which claim specific user interface flows on a mobile device, can the claims be construed to cover the particular methods of identifying, displaying, and interacting with payment units implemented in Nayax's Monyx Wallet app, or are there dispositive functional differences?
  • A key issue for damages will be willfulness: Given that Plaintiff alleges providing pre-suit notice with detailed claim charts, a central question for the court will be whether Defendant’s continued alleged infringement after that date was objectively reckless, which could support a finding of willfulness and lead to enhanced damages.