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Ewinwin, Inc v. Groupon

November 23, 2011

EWINWIN, INC., PLAINTIFF,
v.
GROUPON, INC., DEFENDANT.



ORDER

This cause comes before the Court on Groupon's Motion for Summary Judgment. (Doc. No. 113). eWinWinn ("EWW") opposes the motion. (Doc. No. 116). As explained below, Groupon's motion is granted.

I. Standard of Review

Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor. See Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006)(citation omitted). The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. See id. (citation omitted). When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. See id. (citation omitted).

II. Background

Defendant Groupon has a website that it uses to sell coupons (called "Groupons") to buy a merchant's product or service at a discounted price. Groupon does this by presenting "daily deals" on its website, where Groupon lists the retail value of the merchant's product or service and Groupon's deal price for a Groupon for the product or service. However, the daily deals are contingent on a predetermined number of buyers actually signing up to buy the Groupon for each merchant's product or service. If enough buyers sign up to buy a Groupon for the merchant's product or service, then the deal "tips" and everyone who signs up to purchase the Groupon during the deal period will get the Groupon at Groupon's deal price. If, however, the predetermined number of buyers do not sign up to buy the specific Groupon, then the deal does not tip, and no one is able to buy the Groupon for that merchant's product or service at Groupon's deal price.

Groupon provides incentives for its existing customers to refer new customers. To begin with, a deal may not tip if enough people do not sign up to buy a specific Groupon. Additionally, Groupon rewards existing customers who refer a new customer that actually purchases a Groupon for a deal that tips by giving the referring customer at least ten "Groupon Bucks" for each such referral. Groupon deposits the Groupon Bucks into the referring customer's account within 24 hours (during the week) or 72 hours (on the weekend) after the deal tips for which the new customer purchased a Groupon.

For example, Groupon customer Kerry sees a daily deal for ice cream that has a retail value of $30 and a Groupon deal price of $15. Kerry sends a link for the deal to her friend, Kyle, who has never used Groupon before. If Kyle signs up to purchase the ice cream Groupon and the deal tips, then Kerry will get ten Groupon Bucks for the referral credited to her Groupon account that she can use towards the purchase of her next Groupon.

Like Groupon, Plaintiff EWW is a company that was also created based on a group buying concept, where buyers are able to obtain lower prices for an item as the total quantity of the item purchased by all buyers increases. EWW contends that Groupon has infringed three of its patents relating to the group buying concept. Specifically, EWW's patents at issue are: (1) U.S. Patent Number 7,181,419 ("the 419 patent") issued on February 20, 2007 and titled, "Demand Aggregation System;" (2) U.S. Patent Number 7,689,469 ("the 469 patent") issued on March 30, 2010 and titled, "E-Commerce Volume Pricing;" and (3) U.S. Patent Number 7,899,707 ("the 707 patent") issued on March 1, 2011 and titled, "DAS Predictive Modeling and Reporting Function." As a result, EWW filed the instant lawsuit in which it alleges that Groupon has directly infringed its 419, 469, and 707 patents. (Doc. No. 65).

In response, Groupon has asserted seven counterclaims. (Doc. No. 72). Specifically, Groupon seeks a declaratory judgment that it did not infringe the 419, 469, and 707 patents and that those patents are invalid. Additionally, Groupon also holds a patent based on the group buying concept that was issued on July 31, 2001, U.S. Patent Number 6,269,343 ("the 343 patent"), and Groupon alleges that EWW infringed its 343 patent.

This Court held a Markman hearing and construed several disputed claim terms and phrases within the parties' patents. The dispositive phrases at issue in this motion for summary judgment are the phrases in EWW's patents requiring that the price for the product vary based on the volume of the product ordered. Below is a brief summary of the inventions claimed in EWW's patents and the claim language at issue in the instant motion for summary judgment.

A. EWW's 419 Patent: Demand Aggregation System

EWW's 419 patent describes the invention as a demand aggregation system that uses volume pricing. As such, the invention facilitates buyers working together to take advantage of lower prices due to quantity discounts based on the quantity of the product sold to all buyers. Thus, the invention allows the demand of all of the buyers for a certain product to be aggregated in order for each buyer to obtain a quantity discount.

Claim 1 of EWW's 419 patent contains the following claim language, with the claim language at issue underlined:

A business transaction method, comprising: maintaining buyer profiles in a data storage device; deriving a plurality of customized price schedules for a product based on at least one buyer profile, each of the plurality of customized price schedules varying in accordance with a quantity of the product ordered from a plurality of deal rooms;

electronically offering the product for sale in at least one of the plurality of deal rooms, the product being offered in each deal room in accordance with at least one of the plurality of price schedules; and,

displaying a listing of at least one of the plurality of deal rooms in which the product is offered when at least a subset of criteria indicated for a product search matches criteria describing the product.

The Court construed the disputed phrase as follows: creating two or more price schedules for a product based on information contained in at least one buyer's profile, each price schedule consisting of a list of two or more prices for the product that vary based on a ...


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