Patent Armory Inc v. Capital Credit Union

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: Capital Credit Union (North Dakota)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 3:26-cv-00054, W.D. Wis., 01/23/2026
• Venue Allegations: Venue is based on the defendant having an established place of business in the Western District of Wisconsin.
• Core Dispute: Plaintiff alleges that Defendant’s customer service and/or internal telephony systems infringe patents related to intelligent call routing and auction-based matching of entities.
• Technical Context: The technology at issue involves advanced call center management systems that use algorithmic and economic principles to optimize the routing of communications to agents.
• Key Procedural History: The complaint does not reference any prior litigation, Inter Partes Review (IPR) proceedings, or licensing history related to 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 (’979 Patent)

The Invention Explained

• Problem Addressed: The patent describes the inefficiency of traditional call centers, which often use simple "first-come-first-served" routing or static agent groupings (’979 Patent, col. 2:40-57). These approaches can lead to mismatches between a caller's needs and an agent's skills (the "under-skilled agent" problem) or the assignment of highly-skilled agents to simple tasks (the "over-skilled agent" problem), reducing overall throughput (’979 Patent, col. 4:25-56).
• The Patented Solution: The invention proposes an integrated system that intelligently routes calls by computing an "optimum agent selection" in real time (’979 Patent, Abstract). Instead of relying on separate high-level management software, the patented architecture integrates this intelligence within the low-level communications control system (’979 Patent, col. 59:8-22). This selection is based on analyzing a "call classification" against agent "skill scores" and "skill weights" to optimize a "cost-utility function" that can account for factors like agent skill, training needs, and call center capacity (’979 Patent, col. 61:1-24; Fig. 1).
• Technical Importance: This technology represents a shift from static, queue-based call distribution to dynamic, data-driven, skill-based routing performed within a consolidated telephony architecture to improve efficiency.

Key Claims at a Glance

• The complaint refers to "exemplary method claims" but does not identify specific claims in the complaint body, instead incorporating them by reference to an exhibit not attached to the publicly filed complaint Compl. ¶¶ 12, 14
• Representative independent method claim 10 includes the following essential elements:
  • Receiving a plurality of communications, each with associated classification information.
  • Storing information representing characteristics of a plurality of potential targets.
  • Determining an optimum target for each communication based on a "multivariate cost function" that compares at least three potential targets.
  • Routing the communication to the optimum target, where the determining and routing steps are performed within a "common operating environment."

U.S. Patent No. 9,456,086 - “Method and system for matching entities in an auction”

Issued: Sep. 27, 2016 (’086 Patent)

The Invention Explained

• Problem Addressed: As a continuation of the '979 Patent, the '086 Patent addresses the same general problem of optimizing call center efficiency (’086 Patent, col. 2:22-31). It further refines the problem by framing the matching of callers to agents as an economic transaction that can be optimized through an auction mechanism.
• The Patented Solution: The invention describes a method for matching a first entity (e.g., a caller) with a second entity (e.g., an agent) by performing an "automated optimization with respect to an economic surplus" of the match and the "opportunity cost" of making that specific agent unavailable for other potential matches (’086 Patent, Abstract). This is accomplished by defining "multivalued scalar data" representing "inferential targeting parameters" for the first entity and "characteristic parameters" for the second, and then using an algorithm to find the match that maximizes overall economic value (’086 Patent, Abstract; col. 3:5-18).
• Technical Importance: This technology advances skill-based routing by introducing formal economic concepts like "economic surplus" and "opportunity cost," creating a market-based mechanism for allocating call center resources.

Key Claims at a Glance

• The complaint refers to "exemplary '086 Patent Claims" but does not identify specific claims in the complaint body, instead incorporating them by reference to an exhibit not attached to the publicly filed complaint Compl. ¶¶ 18, 23
• Representative independent claim 1 includes the following essential elements:
  • Storing in memory multivalued scalar data for a first subset of entities (representing "inferential targeting parameters").
  • Storing in memory multivalued scalar data for a second subset of entities (representing "respective characteristic parameters").
  • Performing, using an automated processor, an optimization with respect to at least an "economic surplus" of a match and an "opportunity cost" of the unavailability of the second subset for an alternate match.
  • Outputting a signal in dependence on the optimization.

III. The Accused Instrumentality

Product Identification

The complaint does not specifically identify the accused product(s) or service(s) in its text.

Functionality and Market Context

The complaint alleges infringement by "Exemplary Defendant Products" that are identified and described in claim chart exhibits (Compl. ¶¶ 12, 14, 18, 23). However, these exhibits (Exhibits 3 and 4) were not attached to the publicly filed complaint. The complaint therefore does not provide sufficient detail for analysis of the accused instrumentality's functionality or market context.

IV. Analysis of Infringement Allegations

The complaint alleges direct infringement of the '979 Patent and direct and indirect infringement of the '086 Patent Compl. ¶¶ 12, 18, 22 However, it incorporates all specific factual allegations supporting these claims by reference to claim chart Exhibits 3 and 4, which were not provided with the complaint Compl. ¶¶ 14-15, 23-24 As such, a detailed claim chart summary cannot be constructed. The narrative theory of infringement is that the unspecified "Exemplary Defendant Products" practice the technology claimed in the patents Compl. ¶¶ 14, 23 No probative visual evidence provided in complaint.

Identified Points of Contention

• '979 Patent: A primary question will be whether Capital Credit Union's customer service technology performs the specific algorithmic step of determining an "optimum target" using a "multivariate cost function" as required by claim 10. A related question concerns the architectural limitation of performing this determination within a "common operating environment," and whether the defendant's system meets that requirement.
• '086 Patent: The central dispute may turn on whether the defendant's system for assigning customer inquiries to agents performs an "optimization with respect to at least an economic surplus" and an "opportunity cost," as required by claim 1. The evidence required to prove the existence of algorithms that calculate these specific economic metrics will be a key focus.

V. Key Claim Terms for Construction

For the '979 Patent (from representative claim 10)

• The Term: "multivariate cost function"

• Context and Importance: This term is the core of the patented optimization process. Its construction will determine whether a general multi-factor routing algorithm infringes, or if a more specific type of economic or cost-based calculation is required.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claims themselves use the general term "cost function," which may support an interpretation covering any algorithm that weighs multiple variables to achieve an optimal outcome.
  • Evidence for a Narrower Interpretation: The specification provides detailed examples of a "cost-utility function" that explicitly normalizes disparate factors (e.g., productivity, training value, rewards/punishments) into a common "cost" metric (’979 Patent, col. 65:12-25). A party could argue the term should be limited to such normalizing economic calculations.

• The Term: "common operating environment"

• Context and Importance: This architectural limitation is critical for distinguishing the invention from prior art where intelligent routing logic was physically and logically separate from the low-level switching system. Practitioners may focus on this term because it addresses the physical and logical structure of the accused system, not just its function.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification refers to performing the determination and routing on a "common platform" and a "consolidated platform," which could be read to include multiple processes running on a single server under one OS (’979 Patent, col. 74:10-21, 74:36-41).
  • Evidence for a Narrower Interpretation: The background distinguishes the invention from systems where the intelligence is "separate from the voice routing call management system," suggesting the "common operating environment" requires a tighter integration than merely co-locating processes on the same hardware (’979 Patent, col. 59:45-48).

For the '086 Patent (from representative claim 1)

• The Term: "economic surplus"
• Context and Importance: This is a specific term from the field of economics. The infringement analysis will likely depend heavily on whether the accused system calculates a value that meets the technical definition of "economic surplus."
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: A party might argue that in the context of the patent, the term should be given a more general meaning, such as any calculation of net benefit or value derived from a match, rather than its strict definition in economic theory.
  • Evidence for a Narrower Interpretation: Because "economic surplus" is a well-established term of art, a party could argue it must be construed according to its plain and ordinary meaning in that field, which would require proof of a specific type of value calculation in the accused system.

VI. Other Allegations

Indirect Infringement

The complaint alleges induced infringement of the '086 Patent. The basis for this allegation is that the Defendant allegedly distributes "product literature and website materials inducing end users and others to use its products in the customary and intended manner that infringes the '086 Patent" Compl. ¶21 Evidence for this is referenced in the missing Exhibit 4 Compl. ¶21

Willful Infringement

The complaint alleges actual knowledge of infringement of the '086 Patent beginning upon service of the complaint and the attached (but missing) claim charts Compl. ¶20 The allegation of continued infringement after this notice forms the basis for a potential claim of post-suit willful infringement Compl. ¶21 No facts supporting pre-suit knowledge are alleged.

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

1. A core issue will be one of definitional scope: can the specific algorithmic and economic terms recited in the claims—such as "multivariate cost function," "economic surplus," and "opportunity cost"—be construed to read on the functionality of what may be a conventional customer relationship management or telephony system used by a credit union?
2. A second key issue will be the architectural configuration: does the defendant's system meet the "common operating environment" limitation of the '979 patent, which requires a specific integration of intelligent routing logic with the underlying communications control, or is it a more conventional, separated architecture?
3. A central evidentiary question will be one of technical proof: since the complaint outsources all specific infringement allegations to non-public exhibits, the case will likely turn on whether discovery reveals evidence that the accused systems actually perform the specific, multi-part optimization and economic calculations required by the asserted claims.