Patent Armory Inc v. Southern Bank

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: Southern Bank (North Carolina)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 1:26-cv-220, E.D. Va., 01/23/2026
• Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains an established place of business within the Eastern District of Virginia.
• Core Dispute: Plaintiff alleges that Defendant’s internal call center systems infringe patents related to intelligent call routing and auction-based entity matching.
• Technical Context: The technology at issue involves sophisticated software for managing customer communications in large-scale call centers to optimize agent assignment based on agent skills and call characteristics.
• Key Procedural History: The complaint does not reference any prior litigation, licensing history, or post-grant proceedings involving the patents-in-suit.

Case Timeline

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

U.S. Patent No. 7,023,979 - "Telephony control system with intelligent call routing," Issued Apr. 4, 2006

The Invention Explained

• Problem Addressed: The patent describes the inefficiency of traditional call center Automatic Call Distribution (ACD) systems that route calls based on simple rules like first-come-first-served (’979 Patent, col. 2:45-48). These systems struggle when agents have varying skills, leading to problems such as routing a complex call to an "under-skilled agent" or a simple call to an "over-skilled agent," both of which reduce the call center's overall efficiency ('979 Patent, col. 4:25-40).
• The Patented Solution: The invention proposes an "intelligent switching architecture" that integrates the complex logic for agent selection directly into the low-level telephony control system ('979 Patent, col. 59:9-19). Instead of simple rules, the system receives an incoming call, analyzes its characteristics to create a "call classification," and compares this against a database of agent "skill scores" ('979 Patent, Abstract). It then uses a processor to compute an "optimum agent selection" based on a multivariate analysis of these factors and directly controls the routing of the call to that agent ('979 Patent, col. 61:1-20; Fig. 1).
• Technical Importance: This approach seeks to move complex, skill-based routing decisions from high-level, external software systems into a more integrated and responsive telephony architecture, potentially reducing latency and improving the optimization of call center resources ('979 Patent, col. 60:31-39).

Key Claims at a Glance

• The complaint asserts infringement of "exemplary method claims" ('979 Patent, Compl. ¶12). Independent method claim 10 is representative.
• Essential elements of Independent Claim 10 include:
  • receiving a plurality of communications, each with associated classification information;
  • storing information on the characteristics of potential targets (e.g., agents);
  • determining an optimum target for each communication using a "multivariate cost function" that compares at least three potential targets;
  • routing the communication to the optimum target, with the determination and routing steps performed within a "common operating environment."
• The complaint does not explicitly reserve the right to assert dependent claims for the '979 Patent.

U.S. Patent No. 9,456,086 - "Method and system for matching entities in an auction," Issued Sep. 27, 2016

The Invention Explained

• Problem Addressed: The patent addresses the same call center inefficiencies as the '979 Patent but frames the matching problem in economic terms, noting that simple "best match" algorithms fail to account for the broader costs and benefits of a particular agent assignment (’086 Patent, col. 38:10-22).
• The Patented Solution: The invention claims a method for matching a "first entity" (e.g., an incoming call) with a "second entity" (e.g., an agent) through an automated auction-like optimization ('086 Patent, Abstract). The system calculates not only the value of a given match (the "economic surplus") but also the "opportunity cost"—the value lost by making that specific agent unavailable for other potential, perhaps more valuable, future matches ('086 Patent, Abstract; col. 63:56-64:1). The system performs this optimization and outputs a signal to execute the match.
• Technical Importance: This method introduces sophisticated economic modeling concepts into the real-time process of call routing, aiming for a more globally optimal allocation of agent resources rather than a series of locally optimal but globally inefficient matches ('086 Patent, col. 68:13-24).

Key Claims at a Glance

• The complaint asserts infringement of "exemplary claims" of the '086 Patent Compl. ¶18 Independent method claim 1 is representative.
• Essential elements of Independent Claim 1 include:
  • storing data representing "inferential targeting parameters" for a first subset of entities (e.g., callers);
  • storing data representing "characteristic parameters" for a second subset of entities (e.g., agents);
  • performing an optimization with an automated processor considering both the "economic surplus" of a match and the "opportunity cost" of that match;
  • outputting a signal based on the optimization.
• The complaint does not explicitly reserve the right to assert dependent claims for the '086 Patent.

III. The Accused Instrumentality

Product Identification

The complaint does not identify any accused product, method, or service by a specific name Compl. ¶¶ 12, 18 It refers to them generally as the "Exemplary Defendant Products."

Functionality and Market Context

The complaint alleges that Defendant Southern Bank, a corporation, makes, uses, sells, or imports the accused products and also has its employees internally test and use them Compl. ¶¶ 3, 12-13, 18-19 This suggests the accused instrumentality is a call center or customer service system utilized by the bank in its operations. The complaint does not provide specific details about the technical functionality or market positioning of these systems. No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits (Exhibits 3 and 4) that were not provided with the filed complaint. The infringement theory is therefore summarized below in prose based on the complaint's narrative allegations.

• ’979 Patent Infringement Allegations
  The complaint alleges that the "Exemplary Defendant Products" directly infringe the '979 Patent's method claims Compl. ¶¶ 12, 14 The narrative theory suggests that Southern Bank's call center systems receive incoming customer calls, classify them based on their needs, and use an algorithm to match them to an agent from a pool of available agents based on agent characteristics. The complaint alleges this matching and routing process constitutes the practice of the claimed technology Compl. ¶14
• ’086 Patent Infringement Allegations
  The complaint alleges that the accused products directly and indirectly infringe the '086 Patent Compl. ¶¶ 18, 22 The narrative infringement theory suggests that the accused call center systems perform a sophisticated optimization that goes beyond a simple best-available match. It is alleged that the system's algorithm functions like an auction, valuing each potential call-agent pairing and selecting a match that maximizes value for the call center, implicitly accounting for the "economic surplus" and "opportunity cost" as required by the patent's claims Compl. ¶23
• Identified Points of Contention:
  • ’979 Patent Scope Question: The complaint's allegations raise the question of whether the accused system's logic for selecting an agent rises to the level of a "multivariate cost function" as required by claim 10. The court may need to determine if a rules-based system that considers multiple factors meets this limitation, or if the term requires a more specific type of mathematical optimization.
  • ’086 Patent Technical Question: A central question will be what evidence the complaint provides to support the allegation that the accused system calculates "economic surplus" and "opportunity cost." The analysis may focus on whether the accused system performs a forward-looking, global optimization as described in the '086 Patent, or if it simply performs a present-tense, "best available" match, which may not meet the claim limitations.

V. Key Claim Terms for Construction

• From the ’979 Patent:
  • The Term: "multivariate cost function" (from claim 10)
  • Context and Importance: This term is the core of the claimed optimization. Its construction will be critical to determining whether the accused system's agent-selection algorithm performs the specific type of analysis claimed by the patent.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification discusses optimizing for various factors such as "greatest efficiency, lowest cost, or other optimized variable," suggesting the function could encompass a range of business goals ('979 Patent, col. 4:1-3).
    • Evidence for a Narrower Interpretation: The specification describes normalizing "disparate factors" into a common metric of "cost" and provides specific formulas, such as An=Max[Acn1∑(rsias)+Acn2], which could suggest the "cost function" is limited to such explicit mathematical formulations ('979 Patent, col. 65:1-4).
• From the ’086 Patent:
  • The Term: "opportunity cost" (from claim 1)
  • Context and Importance: This term distinguishes the '086 Patent's claimed method from a simple "best match" algorithm. Infringement will depend on whether the accused system is shown to calculate the value of keeping an agent available for a future, potentially more valuable interaction.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The abstract broadly defines the term as the "opportunity cost of the unavailability of the at least one of the plurality of second entities for matching with an alternate first entity," which could be interpreted to cover any algorithm that reserves skilled agents ('086 Patent, Abstract).
    • Evidence for a Narrower Interpretation: The specification ties the concept to an "automated optimization with respect to an economic surplus" ('086 Patent, Abstract) and discusses it in the context of an auction, which may limit the term's scope to systems that explicitly model future value in a market-based or auction-like framework.

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement of the '086 Patent. The basis for this allegation is Defendant's distribution of "product literature and website materials" that allegedly instruct users (e.g., bank employees) to use the accused systems in an infringing manner Compl. ¶21 The allegation of inducement is also predicated on knowledge acquired "at least since being served by this Complaint" Compl. ¶22
• Willful Infringement: The complaint does not contain a formal count for willful infringement. However, for the '086 Patent, it alleges that service of the complaint constitutes "actual knowledge" and that Defendant's continued infringing activities thereafter are performed despite this knowledge Compl. ¶¶ 20-21 The prayer for relief requests a finding that the case is "exceptional" under 35 U.S.C. § 285, which is often associated with findings of willful infringement or litigation misconduct Compl. ¶H.i

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

• Evidentiary Sufficiency: A primary issue will be whether the complaint’s generalized allegations against unnamed "Exemplary Defendant Products," absent the referenced claim charts, provide sufficient factual matter to state a plausible claim for relief. The case may turn on what discovery reveals about the actual operation of Southern Bank's call center technology and whether it performs the specific optimizations claimed.
• Definitional Scope: The dispute will likely focus on whether the operational logic of a bank's internal customer service system can be construed to fall within the patent-specific language of "auctions," "economic surplus," and "opportunity cost." A key question for the court will be whether these terms, as defined and used in the '086 Patent, read on the accused system's agent-assignment algorithm or if there is a fundamental mismatch in technical and economic principles.