DCT

2:11-cv-00293

Kashless Inc v. BuyWithMe Inc

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Key Events
Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:11-cv-00293, W.D. Wash., 02/18/2011
  • Venue Allegations: Venue is alleged to be proper in the Western District of Washington because the Defendants are subject to personal jurisdiction in the district, where they regularly transact business and offer products and services.
  • Core Dispute: Plaintiff alleges that Defendants’ group buying websites infringe six patents related to fundamental technologies for online demand aggregation, dynamic pricing, and management of group purchasing systems.
  • Technical Context: The technology at issue involves systems and methods for online "group buying," an e-commerce model where the price of a product decreases as more consumers commit to purchasing it, leveraging collective buying power.
  • Key Procedural History: The complaint notes that in a separate state court action, the Superior Court of Washington entered a preliminary injunction against Defendant BuyWithMe, precluding it from "using or disclosing Kashless's confidential information."

Case Timeline

Date Event
1999-02-08 U.S. Patent No. 7,146,330 Priority Date
1999-03-15 U.S. Patent No. 6,604,089 Priority Date
1999-03-15 U.S. Patent No. 6,631,356 Priority Date
1999-03-31 U.S. Patent No. 6,101,484 Priority Date
1999-07-06 U.S. Patent No. 6,934,690 Priority Date
2000-05-23 U.S. Patent No. 7,263,498 Priority Date
2000-08-08 U.S. Patent No. 6,101,484 Issued
2003-08-05 U.S. Patent No. 6,604,089 Issued
2003-10-07 U.S. Patent No. 6,631,356 Issued
2005-08-23 U.S. Patent No. 6,934,690 Issued
2006-12-05 U.S. Patent No. 7,146,330 Issued
2007-08-28 U.S. Patent No. 7,263,498 Issued
2011-02-18 Complaint Filed

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

U.S. Patent No. 6,604,089, "Demand Aggregation Through Online Buying Group," Issued August 5, 2003

The Invention Explained

  • Problem Addressed: The patent describes a seller-controlled retail environment where there is no practical way for suppliers to accurately predict product demand at varying price points, and no mechanism for geographically dispersed buyers to aggregate their purchasing power on a transaction-by-transaction basis (’089 Patent, col. 2:1-24).
  • The Patented Solution: The invention is a method and apparatus for an online buying group, or "co-op," where individual buyers submit binding purchase offers specifying the maximum price they are willing to pay. This collection of offers provides real-time market data, enabling yield management decisions that can trigger price reductions as the volume of committed buyers increases, benefiting both the buyers and the supplier (’089 Patent, col. 1:12-39; Fig. 8).
  • Technical Importance: The invention provides a framework for dynamically adjusting price based on aggregated, real-time consumer demand, moving beyond the static, seller-set pricing common in early e-commerce (’089 Patent, col. 2:40-49).

Key Claims at a Glance

The complaint does not identify specific claims asserted against the Defendants. The following analysis is based on a representative independent claim.

  • Independent Claim 1 (System Claim):
    • An e-commerce server data processing system with software configured to define an on-line buying co-op.
    • The co-op is defined by specifying the product, a time interval, a critical mass point, and at least one price curve.
    • The software is further configured to accept inputs from buyers to take orders for the product.
    • A buyer client data processing system is coupled to the server and configured to receive and display co-op data.
    • The buyer client system is also configured to receive and transmit buyer order inputs to the server.

U.S. Patent No. 7,146,330, "Method and System for Creating and Managing Groups for Increasing Buying Power on the World Wide Web," Issued December 5, 2006

The Invention Explained

  • Problem Addressed: Individual buyers making purchases in small quantities typically lack the bargaining power to negotiate better prices from sellers (’330 Patent, col. 2:1-4).
  • The Patented Solution: The patent discloses a computer-facilitated method for buyers to form a group to purchase a product. The system forms a "collective request" from the group's members and sends it to one or more sellers, who can then respond with a "suggested price quotation." This creates a mechanism for the group to solicit competitive bids from sellers and for sellers to compete for the group's collective business, often through an iterative bidding process (’330 Patent, Abstract; col. 2:10-24). The system is designed to manage the interactions between the buyer group and multiple vendors (Fig. 4).
  • Technical Importance: This technology formalizes the process of group formation and buyer-initiated negotiation in an online environment, shifting the power dynamic from a seller-centric to a more buyer-centric model (’330 Patent, col.2:5-9).

Key Claims at a Glance

The complaint does not identify specific claims asserted against the Defendants. The following analysis is based on a representative independent claim.

  • Independent Claim 1 (Method Claim):
    • Receiving into a computer requests to purchase a product/service by buyers of a group.
    • Forming a collective request for purchase based on the received buyer requests.
    • Sending the collective request to a plurality of sellers.
    • An agent entity receiving a suggested price quotation from the sellers.
    • Automatically providing the received quotation to the sellers for review.
    • Receiving purchase authorization from a buyer to complete a sale with a seller who provided a quotation.

Multi-Patent Capsule: U.S. Patent No. 6,101,484

  • Patent Identification: U.S. Patent No. 6,101,484, "Dynamic Market Equilibrium Management System, Process and Article of Manufacture," Issued August 8, 2000.
  • Technology Synopsis: This patent addresses the problem of managing supply and demand in a dynamic online market. It discloses a system, including a graphical user interface, that allows a market manager to directly manipulate graphical representations of data (such as price curves) to make real-time yield management decisions based on incoming market data, such as binding purchase offers from a buying group (Compl. ¶1; ’484 Patent, Abstract).
  • Asserted Claims: The complaint does not specify asserted claims.
  • Accused Features: The complaint alleges infringement by Defendant DealOn's "establishment and utilization of an online buying group system for aggregating demand" via its website (Compl. ¶45).

Multi-Patent Capsule: U.S. Patent No. 7,263,498

  • Patent Identification: U.S. Patent No. 7,263,498, "Attaining Product Inventory Groupings for Sales in a Group-Buying Environment," Issued August 28, 2007.
  • Technology Synopsis: The patent addresses the inventory risk faced by sellers in a group-buying environment. It discloses a method for a seller to reserve a "virtual inventory" from a supplier for a specific quantity of goods for an agreed-upon time, enabling the seller to conduct a group-buying sale without having to purchase and hold the inventory upfront (’498 Patent, Abstract). This allows the seller to secure supply for a potential sale while mitigating financial risk (Compl. ¶1).
  • Asserted Claims: The complaint does not specify asserted claims.
  • Accused Features: The complaint alleges infringement by the Defendants' "establishment and utilization of attaining product inventory groupings for sales in a group-buying environment" via their respective websites (Compl. ¶27).

Multi-Patent Capsule: U.S. Patent No. 6,934,690

  • Patent Identification: U.S. Patent No. 6,934,690, "System and method for extension of group buying throughout the internet," Issued August 23, 2005.
  • Technology Synopsis: This invention addresses the expansion and syndication of group-buying opportunities across the internet. It describes a platform that enables third-party "partner sites" to select and display group-buying offers, thereby funneling traffic from various online communities to a central group-buying sale and creating a "super aggregation" of demand (’690 Patent, Abstract; col. 2:30-45).
  • Asserted Claims: The complaint does not specify asserted claims.
  • Accused Features: The complaint alleges infringement by the Defendants' "establishment and utilization of a system and or method of an extension of group buying throughout the internet" via their websites (Compl. ¶33).

Multi-Patent Capsule: U.S. Patent No. 6,631,356

  • Patent Identification: U.S. Patent No. 6,631,356, "Demand Aggregation Through Online Buying Groups," Issued October 7, 2003.
  • Technology Synopsis: This patent, which shares a specification with the ’089 Patent, is also directed to the computerized operation of online buying groups. It describes a system where buyers submit binding offers, enabling real-time yield management and dynamic pricing based on aggregated demand (’356 Patent, Abstract). The claims may cover different aspects or embodiments of the same core system described in the ’089 patent family (Compl. ¶1).
  • Asserted Claims: The complaint does not specify asserted claims.
  • Accused Features: The complaint alleges infringement by Defendant DealOn's "establishment and utilization of an online buying group system for aggregating demand" via its website (Compl. ¶39).

III. The Accused Instrumentality

  • Product Identification: The accused instrumentalities are the online services and systems operated by Defendants at the websites www.buywithme.com and www.dealon.com (Compl. ¶¶6, 11).
  • Functionality and Market Context: The complaint alleges that the Defendants operate websites in the group buying industry that directly compete with the Plaintiff (Compl. ¶11). The accused functionality includes the "establishment and utilization" of systems for aggregating consumer demand, creating and managing online buying groups, extending group buying across the internet, and attaining product inventory for such sales (Compl. ¶¶15, 23, 27, 33). These services function by offering products or services for a limited time, with the deal often contingent on a minimum number of buyers participating.

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint does not provide claim charts, nor does it allege infringement with respect to any particular claim limitations. It alleges infringement in broad, conclusory terms, stating for each patent that the Defendants' infringement includes, but is not limited to, the implementation of a system corresponding to the patent's title or general subject matter (Compl. ¶¶15, 21, 27, 33, 39, 45). For example, regarding the ’089 patent, the complaint alleges infringement is indicated by the "implementation and utilization of their respective websites... and the systems and methods more fully described in the ’089 Patent" (Compl. ¶15). Due to the lack of specific factual allegations mapping accused functionality to claim elements, a claim chart summary cannot be constructed.

  • Identified Points of Contention:
    • Pleading Sufficiency: An initial point of contention may be whether the complaint's allegations meet the plausibility standard for patent infringement pleading established by the Supreme Court in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. The complaint does not identify any specific claims or explain how the accused websites meet the limitations of those claims.
    • Technical Questions: A central evidentiary question for trial will be whether the specific software architecture and operational logic of the "buywithme.com" and "dealon.com" websites perform the particular functions required by the asserted patent claims. For example, discovery will be needed to determine if the accused systems create a "collective request" and receive a "suggested price quotation" from sellers in the manner claimed by the ’330 Patent.

V. Key Claim Terms for Construction

The complaint does not provide sufficient detail for analysis of claim construction disputes. However, based on the technology, the construction of the following terms from the representative independent claims of the lead patents may become central to the case.

  • The Term: "market equilibrium manager" (from a related claim in the '089 patent family)

  • Context and Importance: This term appears to describe the core software component responsible for dynamically adjusting prices. Its construction will be critical to determining the level of automated price management and data-driven modification required to infringe. Practitioners may focus on this term to dispute whether the accused systems perform the specific, sophisticated yield management described in the patent or merely a simpler form of conditional pricing.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification describes the manager's function generally as enabling "accurate, real-time yield management decisions" based on "true market data" to "advocate a lower per unit price" (’484 Patent, col. 3:9-13). This language could support a construction covering any system that automatically adjusts price based on demand data.
    • Evidence for a Narrower Interpretation: The detailed description and figures in the related ’484 patent show a specific graphical user interface where a human manager directly manipulates price curves by dragging data points (’484 Patent, Fig. 3B; col. 8:6-10). This could support a narrower construction requiring a specific type of user-interactive management tool, not just a fully automated algorithm.

  • The Term: "collective request" (from Claim 1 of the ’330 Patent)

  • Context and Importance: This term defines the trigger for seller interaction. The dispute will likely center on what constitutes a "collective request." Is it merely the passive aggregation of buyer interest, or must the system generate and transmit a discrete, singular request to sellers on behalf of the group?

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The summary of the invention states a "collective request can be formed for purchasing the product/service using the received buyer requests" (’330 Patent, col. 2:17-19). This may suggest the "forming" is an internal aggregation rather than a discrete transmission.
    • Evidence for a Narrower Interpretation: The same section states the "collective request is sent to the seller" (’330 Patent, col. 2:19-20), which suggests a distinct communication event. This could support a narrower reading requiring a specific data object representing the group's aggregate demand to be formally transmitted to sellers.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that Defendants have indirectly infringed by "inducing the infringement" and "contributing to the infringement" of the patents throughout the United States (Compl. ¶¶17, 23, 29, 35, 41, 47). The complaint does not, however, plead specific facts to support the requisite knowledge and intent for these claims.
  • Willful Infringement: Plaintiff alleges, "upon information and belief," that Defendants have "knowingly or with reckless disregard willfully infringed the Patents" (Compl. ¶51). The basis for this allegation is a general assertion that Defendants had "actual notice of infringement" and acted despite an "objectively high likelihood" that their actions constituted infringement (Compl. ¶51).

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

This case appears to be an early dispute in the "daily deal" or online group-buying space. The resolution will likely depend on the answers to two central questions for the court:

  1. A primary issue will be one of evidentiary proof: Given the complaint's lack of specific infringement allegations, the case will depend entirely on whether discovery reveals technical evidence showing that the specific architecture and operational processes of the accused websites practice every element of the asserted patent claims.
  2. A second key question will involve claim scope and validity: How broadly can the patent claims, which were filed at the inception of the online group-buying model, be interpreted to cover modern "daily deal" websites? This question will be framed by the inevitable defense that the patents are invalid in light of prior art e-commerce, auction, and reverse-auction systems.