DCT
7:25-cv-00457
Pardalis Technology Licensing LLC v. Coinbase Global Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Pardalis Technology Licensing, L.L.C. (Delaware)
- Defendant: Coinbase Global, Inc. (Delaware)
- Plaintiff’s Counsel: Nelson Bumgardner Conroy PC
- Case Identification: 7:25-cv-00457, W.D. Tex., 10/07/2025
- Venue Allegations: Plaintiff alleges venue is proper in the Western District of Texas because Defendant, while a remote-first company, maintains a regular and established place of business in the district, including physical facilities and employees, and through its 2021 acquisition of Unit 410, an office in San Antonio.
- Core Dispute: Plaintiff alleges that Defendant’s cryptocurrency platforms and services infringe three patents related to systems for authoring, tracking, authenticating, and updating immutable data objects in a distribution chain.
- Technical Context: The technology concerns systems for creating and managing uniquely identified, immutable digital records to track assets through segmented supply chains, a field that has parallels to modern blockchain and digital asset management technologies.
- Key Procedural History: The complaint notes that during prosecution of the asserted patents, the applicant distinguished the claims from prior art by emphasizing limitations related to creating and updating immutable informational objects identified by unique identifiers, which the examiner relied upon in finding the claims patentable.
Case Timeline
| Date | Event |
|---|---|
| 2001-08-20 | Earliest Priority Date for Asserted Patents ('696, '869, '668) |
| 2003-12-30 | U.S. Patent No. 6,671,696 Issued |
| 2006-11-14 | U.S. Patent No. 7,136,869 Issued |
| 2011-05-24 | U.S. Patent No. 7,949,668 Issued |
| 2025-10-07 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 6,671,696 - “Informational Object Authoring and Distribution System” (Issued Dec. 30, 2003)
The Invention Explained
- Problem Addressed: The patent describes the problem of authoring, maintaining, and distributing informational objects that contain immutable data, such as Material Safety Data Sheets in the chemical manufacturing industry. The specification notes that prior paper-based systems were costly, created redundant efforts, and lacked a central registry for such information ('696 Patent, col. 1:13-59).
- The Patented Solution: The invention proposes an internet-based system that uses a centralized repository of uniquely identified, immutable "data elements." These data elements are described as "building blocks" of information that are assembled via pointers to create "informational objects" ('696 Patent, col. 2:38-46). Because the data elements themselves are fixed, a new version of an informational object can be created by simply pointing to new or replacement data elements, rather than recreating an entire document, thus maintaining an immutable history ('696 Patent, col. 2:46-54).
- Technical Importance: The patent describes a method for creating auditable, version-controlled digital records for supply chain management using a model of linked, immutable data units. (Compl. ¶¶16, 36).
Key Claims at a Glance
- The complaint asserts independent claim 12 (Compl. ¶54).
- Essential elements of claim 12, a method claim, include:
- maintaining in a read-only mode, a plurality of immutable data elements, each identified by a unique identifier;
- maintaining in a read-only mode, a set of data defining an informational object, comprising unique identifiers corresponding to a selection of data elements;
- enabling an authorized authoring member to create data comprising at least one of a draft data element and a draft informational object;
- authenticating the draft data element or informational object created by the authorized member;
- converting the authenticated draft into a corresponding immutable data element or informational object;
- writing the created immutable object into a memory for use by the maintaining means.
- The complaint expressly reserves the right to assert additional claims (Compl. ¶54 n.18).
U.S. Patent No. 7,136,869 - “Common Point Authoring System for Tracking and Authenticating Objects in a Distribution Chain” (Issued Nov. 14, 2006)
The Invention Explained
- Problem Addressed: The patent identifies inefficiencies in "ownership segmented" distribution chains, using the beef livestock industry as a practical example. It notes that information is rarely passed up or down the chain between independent segments (e.g., breeder, producer, retailer), resulting in variable product quality and difficulty in tracking products ('869 Patent, col. 2:10-50).
- The Patented Solution: The invention claims a "Common Point Authoring system" for creating and managing "Informational Objects" to track a product through its entire lifecycle. A key technical aspect is the method for updating data: instead of altering an existing object, the system creates a "new informational object relating back to said informational object and containing new data" ('869 Patent, Claim 9). This creates an auditable, historical chain of information linked to the product ('869 Patent, col. 5:21-30).
- Technical Importance: The patent extends the concept of immutable data objects to explicitly include a method for creating a historical chain by linking new objects to prior ones, a concept central to tracking assets through a multi-party system. (Compl. ¶¶18-19).
Key Claims at a Glance
- The complaint asserts independent claim 9 (Compl. ¶73).
- Essential elements of claim 9, a method claim, include:
- enabling an authorized authoring member to create a draft informational object that uniquely identifies a product for tracking;
- authenticating the draft informational object;
- converting the authenticated object into a corresponding immutable informational object with a unique identifier;
- writing the immutable object into a memory for use by authorized members; and
- updating an informational object by creating a new informational object that relates back to the prior object and contains new data.
- The complaint expressly reserves the right to assert additional claims (Compl. ¶54 n.18).
U.S. Patent No. 7,949,668 - “Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain” (Issued May 24, 2011)
- Technology Synopsis: This patent continues the themes of the '696 and '869 patents, focusing on a system for "complex sharing" of hierarchically authored data objects. The claims are structured using "means-plus-function" language and describe a system with distinct means for authoring, authenticating, and managing data, including specific steps for authenticating individual "draft data elements" before they are incorporated into a final immutable object ('668 Patent, Claim 1). This addresses the technical problem of maintaining data integrity when multiple authors contribute information at different points in a distribution chain ('668 Patent, col. 1:18-26).
- Asserted Claims: At least Claim 7 is asserted (Compl. ¶91).
- Accused Features: The complaint alleges that Coinbase's platform, which facilitates the creation and sharing of digital assets (cryptocurrency transactions) authored by different users in a distribution chain, infringes the '668 patent's claimed system (Compl. ¶¶92-93).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities include the Coinbase Platform, Coinbase Exchange, Coinbase Prime, and Coinbase Wallet (now called Base App), along with related systems and services (Compl. ¶41).
Functionality and Market Context
- The complaint describes the Accused Products as a platform for users and institutions to trade, store, and spend digital assets like cryptocurrencies and tokens (Compl. ¶42). The platform allegedly utilizes blockchain technology, described as a secure, immutable, and distributed ledger where each transaction is permanently recorded in a "block" (Compl. ¶¶42, 45). Access to the platform's full functionality, such as trading, requires users to be verified through a know-your-customer (KYC) process, after which they are considered authorized (Compl. ¶¶46, 58). The complaint alleges that users are assigned unique addresses and use public-private key cryptography to digitally "sign" and authorize transactions, thereby transferring ownership of digital assets (Compl. ¶¶59-61). The complaint presents a screenshot from Coinbase's website describing the platform as infrastructure to "buy, sell, and store hundreds of cryptocurrencies" (Compl. p. 21, FIG. 2).
IV. Analysis of Infringement Allegations
’696 Patent Infringement Allegations
| Claim Element (from Independent Claim 12) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| maintaining in a read-only mode, a plurality of immutable data elements, each of which is identified by a unique identifier | The blockchain used by the Accused Products is described as an immutable ledger, and data elements for each user are identified by a unique identifier. A diagram in the complaint illustrates this concept of an immutable and shared database of transactions (Compl. p. 23, FIG. 6). | ¶56 | col. 2:46-54 |
| enabling an authorized authoring member to create data comprising at least one of a draft data element and a draft informational object | The complaint alleges that the Coinbase platform authorizes users via a KYC process and enables them to create data in the form of proposed cryptocurrency transactions. This process is illustrated with a screenshot describing user verification steps (Compl. p. 28, FIG. 15). | ¶58 | col. 6:50-56 |
| authenticating said at least one of a draft data element and a draft informational object created by said authorized authoring member | In order to conduct a transaction, a user must provide proof of ownership by signing the transaction with a private key, which serves as a digital signature to authenticate the transaction. | ¶61 | col. 10:22-30 |
| converting said authenticated ... draft data element and a draft informational object ... to a corresponding immutable ... data element and an informational object | The authenticated draft transaction is converted to a corresponding immutable object when it is recorded on the blockchain as part of a confirmed block. | ¶64 | col. 10:30-35 |
’869 Patent Infringement Allegations
| Claim Element (from Independent Claim 9) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| enabling an authorized authoring member to create data comprising a draft informational object, which uniquely identifies a product for tracking purposes | Authorized (KYC-verified) users create proposed transactions which uniquely identify a cryptocurrency (the alleged "product") for tracking purposes. | ¶75 | col. 9:10-18 |
| authenticating said draft informational object created by said authorized authoring member | To conduct a transaction, a user provides proof of ownership of the cryptocurrency by signing the proposed transaction with their private key, which is managed by the Coinbase platform. | ¶78 | col. 9:19-21 |
| converting said authenticated informational object ... to a corresponding immutable informational object which is identified by a unique identifier | The authenticated transaction is converted into an immutable object when it is recorded on the blockchain as a block, which is identified by a unique identifier (a hash). | ¶81 | col. 9:22-26 |
| writing said created immutable informational object into a memory for use by authorized accessing members | The Accused Products write and store records of blocks on a digital ledger (memory), which authorized users can access to view cryptocurrency transaction records. | ¶82 | col. 9:27-29 |
| updating an informational object by creating a new informational object relating back to said informational object and containing new data | When a cryptocurrency is sold, the blockchain is updated by creating a new block (a new informational object) that relates back to the prior block via a cryptographic hash and contains new data pertaining to the sale. The complaint includes a diagram of a simplified block chain to illustrate this concept (Compl. p. 50, FIG. 45). | ¶83 | col. 9:30-33 |
- Identified Points of Contention:
- Scope Questions: The asserted patents are rooted in the context of tracking physical assets (chemicals, livestock) through commercial supply chains. A central question may be whether the term "product," as used in the claims, can be construed to cover a purely digital asset like a cryptocurrency, which did not exist in its modern form when the patents' priority applications were filed.
- Technical Questions: The patent specifications describe authentication as being performed by a central "authoring server" that checks for "proper content, format, and Permissions" ('696 Patent, col. 10:22-30). This raises the question of whether the decentralized cryptographic signing and network validation inherent in blockchain technology performs the same function, in substantially the same way, as the centralized server-based system described in the patents.
V. Key Claim Terms for Construction
The Term: "informational object"
- Context and Importance: This term is the core subject matter of the claims. The outcome of the case may depend on whether a cryptocurrency transaction or a block on a blockchain is determined to be an "informational object."
- Intrinsic Evidence for a Broader Interpretation: The '696 patent defines an "Informational Object" functionally as "a set of information that is uniquely identified and stored in immutable form" and which comprises pointers to individual data elements ('696 Patent, col. 4:21-26). This abstract, functional definition could support its application to a digital construct like a blockchain transaction.
- Intrinsic Evidence for a Narrower Interpretation: The specifications consistently use examples from physical supply chains, such as "Material Safety Data Sheets" for chemicals ('696 Patent, col. 1:16-18) and records for tracking "animals and their products" ('869 Patent, col. 2:65-67). This context may suggest the term was intended to cover digital records corresponding to physical, tangible assets.
The Term: "updating an informational object by creating a new informational object relating back to said informational object" ('869 Patent, Claim 9)
- Context and Importance: This limitation is critical to the infringement theory for the '869 patent and conceptually parallels the structure of a blockchain. Practitioners may focus on whether the technical mechanism of a blockchain's hash-based chain is equivalent to the "relating back" described in the patent.
- Intrinsic Evidence for a Broader Interpretation: The plain language requires only that a "new" object "relat[es] back" to the "said" (prior) object. Plaintiff may argue that a new block containing the hash of the preceding block meets this functional requirement, creating a historical chain as intended by the invention.
- Intrinsic Evidence for a Narrower Interpretation: The specification describes creating a "new version" of an object that "simply includes a unique identifier that points to a replacement data element, while the original data element is maintained" ('869 Patent, col. 5:24-28). A party could argue that a new blockchain transaction is a distinct event, not a "new version" of a prior one, and that a cryptographic hash chain is a different technical implementation than the system of pointers to replacement data elements described.
VI. Other Allegations
- Indirect Infringement: The complaint alleges indirect infringement by way of inducement (Compl. ¶52). However, it does not plead specific facts, such as references to user manuals, marketing materials, or other instructions, that would demonstrate Defendant’s specific intent to encourage its users to perform the claimed methods.
- Willful Infringement: The complaint does not contain a specific count for willful infringement or allege facts to support pre-suit knowledge of the patents. The prayer for relief includes a request for a judgment that the case is exceptional and an award of enhanced damages under 35 U.S.C. § 285 (Compl. ¶109(iv)).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "product," which in the patents' specifications refers to physical items like livestock and chemicals, be construed to encompass purely digital assets like cryptocurrencies that are created and exist entirely on a network?
- A key question of technical application will be whether the patents' disclosure of a centralized, server-based architecture for "authenticating" and linking "informational objects" is foundational to, or fundamentally distinct from, the decentralized cryptographic validation and chained-block structure of the accused blockchain systems.
- The case may also turn on a temporal question: given that the patents' priority date predates the publication of the Bitcoin white paper and the widespread adoption of blockchain technology, a central issue will be whether the patents claim a specific, now-outmoded implementation or a broader, foundational concept that reads on later-developed technologies like blockchain.