IBM Corp v. Zillow Group Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: International Business Machines Corporation (New York)
  • Defendant: Zillow Group, Inc. and Zillow, Inc. (Washington)
  • Plaintiff’s Counsel: Hankin Patent Law, APC; Desmarais LLP
• Case Identification: 8:19-cv-01777, C.D. Cal., 12/02/2019
• Venue Allegations: Plaintiff alleges venue is proper in the Central District of California because Defendants maintain a regular and established place of business in Irvine, employ numerous technical, sales, and marketing personnel in the district who are responsible for the design, development, and operation of the accused products, and own properties in the district through their "Zillow Offers" service.
• Core Dispute: Plaintiff alleges that Defendant’s online real estate websites and mobile applications infringe seven patents related to foundational internet technologies, including client-server architecture, single-sign-on processes, interactive map displays, and targeted advertising.
• Technical Context: The patents-in-suit address core challenges in delivering interactive, media-rich online services efficiently, managing user identity across different providers, and presenting complex data and advertising in a user-friendly manner.
• Key Procedural History: The complaint alleges that Plaintiff first contacted Defendant regarding patent licensing in June 2016 and subsequently sent multiple letters and held meetings between August 2017 and November 2019, providing detailed claim charts demonstrating alleged infringement of the patents-in-suit.

Case Timeline

Date	Event
1988-07-15	U.S. Patent No. 7,072,849 Priority Date
2000-05-31	U.S. Patent No. 7,076,443 Priority Date
2001-04-12	U.S. Patent No. 7,187,389 Priority Date
2006-07-04	U.S. Patent No. 7,072,849 Issued
2006-07-11	U.S. Patent No. 7,076,443 Issued
2006-07-24	U.S. Patent No. 8,315,904 Priority Date
2006-12-08	U.S. Patent No. 7,631,346 Priority Date
2007-03-06	U.S. Patent No. 7,187,389 Issued
2009-12-08	U.S. Patent No. 7,631,346 Issued
2011-12-30	U.S. Patent No. 9,158,789 Priority Date
2012-01-26	U.S. Patent No. 9,245,183 Priority Date
2012-11-20	U.S. Patent No. 8,315,904 Issued
2015-10-13	U.S. Patent No. 9,158,789 Issued
2016-01-26	U.S. Patent No. 9,245,183 Issued
2016-06-01	Plaintiff alleges it first attempted to reach a licensing agreement with Defendant (approximate date)
2017-08-11	Plaintiff allegedly sent Defendant a letter regarding infringement of the ’849 and ’789 Patents
2017-10-31	Plaintiff allegedly informed Defendant of infringement of the ’346 Patent
2017-11-13	Plaintiff allegedly presented Defendant with claim charts for the ’849, ’789, and ’346 Patents
2019-01-14	Plaintiff allegedly informed Defendant of infringement of the ’183 and ’389 Patents
2019-08-26	Plaintiff allegedly informed Defendant of infringement of the ’904 and ’443 Patents
2019-11-25	Plaintiff allegedly provided additional evidence of infringement for the ’183 Patent
2019-12-02	First Amended Complaint Filed

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

U.S. Patent No. 7,072,849 - “Method for presenting advertising in an interactive service,” Issued July 4, 2006

The Invention Explained

• Problem Addressed: In the late 1980s, interactive online services like Prodigy faced the technical challenge of providing rich applications to millions of users with minimal response times (Compl. ¶41). Conventional systems that relied heavily on central host servers for processing were inefficient, and introducing advertising in a conventional manner threatened to further degrade performance and disrupt the user experience ('849 Patent, col. 1:15-51).
• The Patented Solution: The invention proposes structuring both applications and advertisements as discrete "objects" of data and code that can be processed by the user's own computer (the "reception system") ('849 Patent, col. 2:27-40). This client-side processing reduces the load on host servers. The solution includes "pre-fetching" and "selectively storing" advertising objects on the user's machine, allowing them to be displayed concurrently with the primary application content without network delays (Compl. ¶42; '849 Patent, Abstract).
• Technical Importance: This client-server architecture, which shifted processing tasks to the user's PC, was a foundational technology for early large-scale graphical online services, enabling them to operate efficiently before the advent of the modern World Wide Web (Compl. ¶43).

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 (Compl. ¶103).
• Claim 1 is a method for presenting advertising that includes the essential elements:
  • Presenting advertising obtained from a computer network.
  • Structuring applications for presentation in a first portion of a screen.
  • Structuring advertising compatibly for concurrent presentation in a second portion of the screen.
  • Configuring the advertising as "objects" that include advertising data.
  • Selectively storing advertising objects at a store established at the user's reception system.

U.S. Patent No. 7,631,346 - “Runtime user account creation operation in a federated computing environment using a single-sign-on process,” Issued December 8, 2009

The Invention Explained

• Problem Addressed: Single-sign-on (SSO) technology facilitates user access to resources across different service providers but, at the time of the invention, typically required the user to already have an existing account with the service provider they wished to access (Compl. ¶44).
• The Patented Solution: The patent describes a method for a "federated computing environment" where a user without a pre-existing account can use an SSO process to both access a protected resource and have an account created for them "at runtime" ('346 Patent, Abstract). An identity provider triggers the SSO operation, and the service provider receives a user identifier and uses it to create the new account before granting access, streamlining the new user onboarding process (Compl. ¶45).
• Technical Importance: This technology extends the convenience of single-sign-on to the user acquisition process, reducing friction for new users interacting with services within a trusted, federated ecosystem (Compl. ¶45).

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 (Compl. ¶126).
• Claim 1 is a method for managing user authentication that includes the essential elements:
  • Triggering a single-sign-on operation on behalf of a user to access a protected resource hosted by a second system, which requires a user account.
  • The second system receiving an identifier associated with the user from a first system.
  • Creating a user account for the user at the second system based on the received identifier.
  • This account creation occurs after triggering the SSO but before generating a response for accessing the resource.

U.S. Patent No. 9,245,183 - “Geographical area condition determination,” Issued January 26, 2016

• Technology Synopsis: The patent addresses the problem of evaluating the "desirability" of a location without relying on manual input (Compl. ¶51). The solution involves a system that collects unstructured image data (e.g., from street-level photos), converts it into structured data, compares it against baseline values to calculate "condition scores," and generates a map displaying an overall score for a geographic area (Compl. ¶52).
• Asserted Claims: At least Claim 1 (Compl. ¶140).
• Accused Features: The complaint accuses Zillow's "Zestimate" and Zillow Home Value Index (ZHVI) features, which calculate and display property value estimates, of infringing the ’183 patent (Compl. ¶140, 147).

U.S. Patent No. 9,158,789 - “Coordinated geospatial, list-based and filter-based selection,” Issued October 13, 2015

• Technology Synopsis: Prior art geospatial search tools were not dynamically responsive to user selections, often presenting irrelevant results within a fixed map view (Compl. ¶57). The invention allows a user to draw a selection area of a user-determined shape on a map display, which then filters the results on both the map and a synchronized list display, a process the patent describes as filtering based on deselection of items outside the drawn area (Compl. ¶¶ 59-60).
• Asserted Claims: At least Claim 8 (Compl. ¶163).
• Accused Features: The complaint accuses Zillow's map-based search functionality, particularly the "Draw Your Own Search" feature that allows users to draw a custom boundary on a map to filter property listings (Compl. ¶¶ 163, 166).

U.S. Patent No. 7,187,389 - “System and method for simultaneous display of multiple object categories,” Issued March 6, 2007

• Technology Synopsis: As data systems grew more complex, displaying many categories of objects on a two-dimensional screen resulted in cluttered and overlapping displays (Compl. ¶¶ 65-66). The invention discloses a method of grouping objects into different "layers" and applying "non-spatially distinguishable display attributes" (e.g., color, hue, saturation) and a "display emphasis" to visually distinguish objects in one layer from another, thereby reducing clutter while showing relationships (Compl. ¶67).
• Asserted Claims: At least Claim 1 (Compl. ¶185).
• Accused Features: Zillow's map interfaces that display different categories of properties (e.g., "For Sale," "For Rent," "Sold") using different colors or icons are accused of infringement (Compl. ¶¶ 185, 188). The complaint's Exhibit 60 shows a map with differently colored pins representing these categories (Compl. Ex. 60).

U.S. Patent No. 7,076,443 - “System and technique for automatically associating related advertisements to individual search results items of a search result set,” Issued July 11, 2006

• Technology Synopsis: Targeted advertising at the time of the invention relied on user profiling, which was cumbersome and often based on outdated data (Compl. ¶¶ 74-77). The invention describes a method that avoids user profiling by analyzing the search result itself to produce a keyword, using that keyword to find a matching advertisement from a repository, and then correlating that advertisement with the search result (Compl. ¶¶ 78-80).
• Asserted Claims: At least Claim 1 (Compl. ¶208).
• Accused Features: Zillow's systems that display advertising alongside property search results are accused of infringement (Compl. ¶209).

U.S. Patent No. 8,315,904 - “Organization for promotion management,” Issued November 20, 2012

• Technology Synopsis: Marketers faced challenges in efficiently creating and distributing large numbers of individualized promotions to relevant customers (Compl. ¶¶ 81-83). The patented solution uses "promotion templates" to dynamically generate individual "promotion instances" and "promotion lists" that can be populated and distributed in response to user-generated search queries, improving the efficiency and relevance of online promotions (Compl. ¶¶ 84, 88). A diagram in the complaint illustrates this dynamic, query-based promotion distribution model (Compl. p. 53).
• Asserted Claims: At least Claim 1 (Compl. ¶230).
• Accused Features: The complaint accuses Zillow's advertising services, such as Zillow Group Media, which create and distribute promotional campaigns and advertisements to customers (Compl. ¶¶ 231, 232).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendants' websites, including at least www.zillow.com and www.zillowgroupmedia.com, and associated mobile applications, such as the Zillow Real Estate & Rentals, Zillow Rentals, and Zillow Premier Agent applications for iOS and Android (Compl. ¶¶ 99, 122).

Functionality and Market Context

The accused products constitute an online real estate platform providing services to consumers and real estate professionals (Compl. ¶¶ 32, 101). The complaint alleges that Zillow's platform incorporates functionalities such as map-based property searching with synchronized list views and user-drawable search boundaries; automated property value estimations ("Zestimates"); layered displays of different property types (e.g., for sale, for rent); single-sign-on integration with third-party identity providers; and various advertising and promotion services (Compl. ¶¶ 103, 126, 140, 163, 185, 208, 230). The complaint asserts Zillow operates the "largest portfolio of real estate and home-related brands on mobile and the web" and generates over $1.3 billion in revenue from these services (Compl. ¶¶ 32, 110). An image provided in the complaint shows Zillow's office in Irvine, California, which is alleged to be a site for the development of these infringing functionalities (Compl. Ex. 1).

IV. Analysis of Infringement Allegations

U.S. Patent No. 7,072,849 Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
a method of presenting advertising obtained from a computer network...	Zillow's websites and mobile applications present advertising from services such as Zillow Group Media and for properties under Zillow Offers and Promoted Communities.	¶104	col. 2:5-14
structuring applications so that they may be presented, through the network, at a first portion of one or more screens of display;	The Zillow user interface presents its core application features, such as property listings and search tools, in a primary portion of the screen.	¶103(b)	col. 2:27-31
structuring advertising in a manner compatible to that of the applications so that it may be presented, through the network, at a second portion of one or more screens of display concurrently with applications...	Zillow's platform displays advertisements in separate screen portions (e.g., sidebars, banners) at the same time as the primary application content. A screenshot shows a map display next to a list of property results, some of which may be advertisements (Compl. Ex. 44).	¶103(c)	col. 2:32-37
wherein structuring the advertising includes configuring the advertising as objects that include advertising data and;	The advertising presented on Zillow's platform is allegedly configured as data objects (e.g., HTML/JavaScript components) that contain the advertising content.	¶103(c)	col. 2:38-40
selectively storing advertising objects at a store established at the reception system.	Advertising objects are allegedly stored (cached) on the user's device (the "reception system"), with the complaint attributing this step to performance by the user's browser or a CDN, as directed by Zillow. An HTTP request analysis purports to show content being served from a local edge server (Compl. Ex. 28).	¶103(d), ¶107, ¶108	col. 2:41-43

Identified Points of Contention

• Scope Questions: A central question may be whether the term "reception system," as understood in the context of the patent's 1988 priority date (referring to a user's PC connected to a closed online service), can be construed to cover a modern web browser or mobile application operating on the open internet.
• Technical Questions: The infringement allegation for "selectively storing" advertising objects relies on attributing the actions of a user's browser, a mobile operating system, or a third-party Content Delivery Network (CDN) to Zillow (Compl. ¶¶ 107-108). This raises the evidentiary question of whether standard web caching mechanisms perform the specific function of "pre-fetching" and "staging" advertising objects in anticipation of being called, as described in the patent, and whether Zillow directs or controls this functionality to a degree sufficient to be held directly liable for that step.

U.S. Patent No. 7,631,346 Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
managing user authentication within a distributed data processing system, wherein a first system and a second system interact within a federated computing environment and support single-sign-on operations...	Zillow's platform (the second system) interacts with third-party identity providers like Google and Facebook (the first system) to manage user login and authentication.	¶126(a)	col. 1:44-53
triggering a single-sign-on operation on behalf of the user in order to obtain access to a protected resource that is hosted by the second system, wherein the second system requires a user account...	A user initiates a single-sign-on process (e.g., by clicking "Sign in with Google") on Zillow's platform to access user-specific features, which are protected resources requiring an account.	¶126(b)	col. 1:54-59
receiving from the first system at the second system an identifier associated with the user;	Zillow's servers receive a unique user identifier (e.g., an email address or token) from the third-party identity provider's system.	¶126(c)	col. 1:63-65
creating a user account for the user at the second system based at least in part on the received identifier... after triggering the single-sign-on operation but before generating at the second system a response for accessing the protected resource...	For a user new to Zillow, the platform uses the identifier received from the identity provider to create a new Zillow account as part of the SSO workflow, before granting access to the protected account features.	¶126(d)	col. 1:66-2:5

Identified Points of Contention

• Scope Questions: The dispute may turn on whether the relationship between Zillow and consumer-facing identity providers like Google and Facebook constitutes a "federated computing environment" as the patent construes the term.
• Technical Questions: Infringement of the final element depends on a precise sequence of events: account creation must occur after the SSO is triggered but before access to the resource is granted. The actual timing and sequence of API calls and data transfers between Zillow and the identity provider will be a key factual question.

V. Key Claim Terms for Construction

For the ’849 Patent

• The Term: "selectively storing advertising objects at a store established at the reception system"
• Context and Importance: This term is critical because it describes the client-side action that distinguishes the invention from purely server-based systems. Practitioners may focus on this term because its construction will determine whether modern browser caching, which is largely automated, is equivalent to the more deliberate "pre-fetching" and "staging" system described in the patent, which was developed before modern browsers existed.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent's abstract states a goal is "minimizing the potential for communication line interference" and making advertising available "so as not to delay presentation," purposes which standard caching also serves ('849 Patent, Abstract).
  • Evidence for a Narrower Interpretation: The detailed description explains that objects are "pre-fetched from the network and staged at the reception system in anticipation of being called for presentation" ('849 Patent, col. 2:8-11). This language could support a narrower construction requiring a more active, predictive management of the local store than what is performed by default browser caching.

For the ’346 Patent

• The Term: "creating a user account... after triggering the single-sign-on operation but before generating... a response for accessing the protected resource"
• Context and Importance: This term defines the novel "runtime" aspect of the invention. Its construction is central because the entire infringement analysis for this claim hinges on the precise timing of the account creation step relative to other steps in the SSO workflow.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The claim language itself provides the primary context. It does not specify the mechanism of the "trigger" or the "response," which may allow for it to be read on a variety of modern authentication protocols where a sequence of token exchanges and redirects culminates in both account creation and access.
  • Evidence for a Narrower Interpretation: The specification's description of the sequence of interactions between the first and second systems could provide context suggesting a more specific, lock-step process ('346 Patent, col. 4-6). A defendant may argue that modern, asynchronous API calls do not map onto the specific sequence disclosed in the patent's embodiments.

VI. Other Allegations

Indirect Infringement

The complaint alleges both induced and contributory infringement for all asserted patents. Inducement is primarily based on allegations that Zillow provides customer support, user manuals, and designs its platform to encourage and instruct end users to use the accused products in an infringing manner (Compl. ¶¶ 114, 147, 173). Contributory infringement is based on allegations that Zillow provides computer code and applications that are especially made or adapted for infringement and are not staple articles of commerce with substantial non-infringing uses (Compl. ¶¶ 112, 148, 171).

Willful Infringement

Willfulness is alleged for all patents. The basis for this allegation is pre-suit knowledge stemming from a multi-year history of communications, beginning in June 2016, in which IBM allegedly notified Zillow of the infringement and provided detailed claim charts for each of the patents-in-suit (Compl. ¶¶ 91-94, 109, 129).

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

• A core issue will be one of temporal and technological scope: can claim limitations drafted for technologies of the late 1980s (client-side object processing for closed networks like Prodigy) and mid-2000s (early enterprise-focused federated identity) be construed to cover the technical realities of the modern open web, including standard browser caching, social media logins, and cloud-based content delivery networks?
• A key evidentiary question will be one of divided infringement: for the multiple asserted method claims where essential steps are performed by third parties (such as the end user's browser, a mobile operating system, or a CDN), what evidence will show that Zillow "directs or controls" the performance of those steps in a manner that satisfies the legal standard for direct infringement liability?
• A central legal and factual question will be one of willfulness: given the complaint's detailed allegations of pre-suit notice, including the provision of claim charts over several years, the analysis will focus on whether Zillow's continued operation of the accused features after such notice was objectively reckless.