Key Takeaways:
- Recent filings from Alpha Modus against H&M and Inditex show that homegrown retail systems have become sophisticated enough for their internal methods to be challenged in patent disputes.
- Separately, Arizona’s case against Temu demonstrates rising scrutiny over how commerce apps collect and use data. When a shopping platform can observe location, device activity and network behaviour, regulators increasingly treat its conduct as a matter of public and commercial accountability.
- The two cases together show that retailer’s development and deployment of technology is now open to being questioned by regulators and rightsholders. This raises the expectation that retailers document how their own systems are built, and disclosure how they make decisions and handle data, because those behaviours are more likely than ever to undergo external examination.
This week’s Alpha Modus filings against H&M in the United States (and before them Inditex, via a similar complaint filed in November) underline a broader shift in which self-developed and homegrown brand and retail technology is beginning to meet the kinds of legal frameworks that usually sit around more established technical sectors.
The filings allege that both retailers’ internal development teams infringed patents covering in-store AI systems for shopper analytics, layout optimisation, inventory intelligence, personalised marketing and automated checkout. You can read the details in purely legal terms if you want to, but they also point to something larger: far from being solely made up of third-party vendor systems, the average retail tech estate is now built from a mix of internal systems, vendor platforms, and integration and middleware layers.
This is the latest bounce in a pendulum swing that we’ve seen go both ways before. There have been periods in the last two decades where brands and retailers were convinced that rolling their own technology was the right approach, times when buying integrated portfolios made more sense, and moments where assembling a patchwork of best of breed solutions was the strategy du jour.
Where we’ve landed, at least for now, is a middle ground, where we have gigantic, multinational companies that have developed their own PLM systems and similar platforms, but that also rely on third party enterprise systems. On top of these – and especially now, as AI enters its application era – the same brands and retailers are now layering a steadily-growing set of analytics layer and AI models, with the upshot being that, within the walls of a single brand, it’s entirely feasible to wind up with cross-pollination of features, functions, capabilities, and philosophies… as well as opportunities for companies to believe that they can build better than they can buy.
Specifically, the Alpha Modus filings centre on in-store analytics and behavioural modelling, and assert that H&M and Inditex’s systems implement methods covered by Alpha Modus’s patents. Whether that overlap exists will be determined legally, but the nature of the claim is notable: it treats the behaviour of a retailer’s own system (how it interprets signals and makes decisions) as something that can be examined and challenged in method terms the same way that a software vendor would go after a competitor. In patent contexts, it has never mattered whether a company built a system internally or licensed it; what matters is what the system does. And as retailers begin relying on sensing, automated reasoning, path modelling, stock-movement analytics and other forms of embedded intelligence, they enter a space where system behaviour is assessed with the same technical scrutiny used in automation, robotics and other industries built on software-driven decision-making.
If this is one side of the tech battleground that retailers now operate in, this week’s Temu case filed by Arizona’s Attorney General provides the other. The details differ (this time the focus is data collection, consent and platform behaviour) but the underpinning idea is similar: that retail and brand companies are now operating so much like technology companies that they should be examined, and potentially regulated, the same way.
The complaint alleges that Temu’s app uses bargain-price shopping as a Trojan horse to convince customers to keep it installed, whereafter it allegedly collects extensive sensitive data, including precise location, device information and network activity. The filing also argues that aspects of the Temu codebase resemble spyware or malware behaviours, which would be another case of retail borrowing tech inspiration from the open market, but a less savoury one.
These two issues don’t align perfectly, but they do make it clear that very different parts of the homegrown retail stack – everything from in-store decision-making to mobile data handling – are now open to outside interpretation, and are being weighted and evaluated in the same terms as open-market consumer-facing apps and enterprise systems.
In the immediate term, this won’t much affect the way retailers think about self-developing versus accepting open market tech tenders, but it will create a slightly different set of priorities for retailers’ internal development teams, and it will likely create a need for documentation and governance that can be used to demonstrate that homegrown codebases are clear of plagiarism.
The interesting question now is how the industry chooses to adapt, whether through more rigorous evaluation of system behaviour, tighter integration governance, clearer data-handling frameworks, or a more explicit recognition that, if technology runs retail, the tech that retail uses is now part of the same competitive landscape as the rest of software.
