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Inc. v. Alcatel-Lucent USA, Inc.

United States District Court, E.D. Texas, Tyler Division

May 2, 2017

NETWORK-1 TECHNOLOGIES, INC.
v.
ALCATEL-LUCENT USA, INC.,

          ORDER ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          ROBERT W. SCHROEDER III UNITED STATES DISTRICT JUDGE.

         Before the Court are the parties' cross-objections to the Report and Recommendation of the United States Magistrate Judge (Docket No. 693) regarding the disputed claim terms in United States Patent No. 6, 218, 930 (“the '930 Patent”), and regarding Defendants' Motion for Summary Judgment of Invalidity Under 35 U.S.C. § 305.[1] Having reviewed the written objections de novo, both Plaintiff's and Defendants' objections are OVERRULED. The Magistrate Judge's Report and Recommendation (Docket No. 693) (“Report”) is accordingly ADOPTED.

         PLAINTIFF'S OBJECTIONS

         Plaintiff has filed two sets of objections to the Report. First, Plaintiff objects to the Magistrate Judge's construction of certain disputed claim terms. Docket No. 722. Second, Plaintiff objects to the Report regarding Defendants' Motion for Summary Judgment of Invalidity under 35 § 305. Docket No. 723.

         I. Plaintiff's Objections to the Report and Recommendation Regarding Claim Construction (Docket No. 722)

         A. Main Power Source

         Plaintiff first objects to the Report's construction of “main power source” as a “DC power source.” Docket No. 722 at 1. Plaintiff argues that the Report improperly excluded AC power sources because: (1) neither the claim language, specification, nor prosecution history supports such a construction; and (2) construing the term as including an AC power source would not render the claims inoperable since (a) Network-1's proposal encompasses both AC and DC power sources, and therefore would fully encompass an embodiment that used an AC power source; and (b) it is quite common to have infringing switches operate from an AC power source. Docket No. 722 at 2-3.

         Plaintiff's first point-that a construction excluding AC power sources is unsupported by the claim language, specification, or prosecution history-is unavailing. The Court discussed this argument in Cisco. See Cisco Markman at 8-10; see also Cisco Reconsideration at 3-4.[2] As the Report noted, Defendants' expert explained that the '930 Patent itself states that “[t]here are three states which can be determined: no voltage drop, a fixed level voltage drop, or a varying level voltage drop.” See Docket No. 693 at 7 (quoting Docket No. 612, Ex. B (“Neikirk Decl.”) at ¶ 37 (citing '930 Patent at 3:2-4)). The Report found persuasive the opinion of Defendants' expert that if the “main power source” provided AC current, it would be unable to detect the second state, a fixed voltage drop. Docket No. 693 at 7-8 (citing Neikirk Decl. at ¶ 37); Docket No. 742 at 2. As the Report concluded, “[a] construction that renders the claimed invention inoperable should be viewed with extreme skepticism.” Docket No. 693 at 8 (quoting Talbert Fuel Sys. Patents Co. v. Unocal Corp., 275 F.3d 1371, 1376 (Fed. Cir. 2002), vacated and remanded on other grounds, 537 U.S. 802 (2002)). See also CANVS Corp. v. United States, 126 Fed.Cl. 106, 117 (2016) (“Even if defendant's definition were the more customary meaning accepted in the field at the time of invention, it directly contradicts the intrinsic evidence and thus, cannot stand.”) (citing Renishaw PLC v. Marposs Societa' per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 1998)).

To this end, Plaintiff next objects:
[T]he argument that an AC power source would render the claims inoperable because it could not detect “a fixed voltage drop” as in the preferred embodiment rests on the false premise that Network-1's proposal precludes an AC power source. Network-1's proposal encompasses both AC and DC power sources, and, therefore would fully encompass an embodiment that used an AC power source.

Docket No. 722 at 2-3.

         Plaintiff appears to argue that construing the term as an AC power source does not render the claims inoperable because its proposal construes the term to include an AC power source. Id. This conclusory argument fails to address the crux of the Magistrate Judge's finding that such a construction would be inconsistent with the specification, as discussed in the above-cited proceedings in Cisco, and would render the device inoperable. See Docket No. 693 at 7-8. Indeed, Plaintiff has not presented evidence to counter Defendants' evidence, cited in the Report, that it is not feasible to detect a fixed voltage drop in the presence of an AC current. Id.

         Plaintiff's third point-that it is quite common to have switches operate from an AC power source-even if taken as true, similarly fails because it does not respond to the Report's finding that construing “main power source” to include AC power sources would render the claims inoperable. Docket No. 693 at 7-8 (citing Neikirk Decl. at ¶ 37).

         The Court OVERRULES Plaintiff's objections as to “main power source.”

         B. Secondary Power Source

         The Report construed “secondary power source” as “a source of power connected to provide power between the data node and the access device using the data signaling pair; the driving points of the secondary power source must be physically separate from the driving points of the main power source.” Docket No. 693 at 10. Plaintiff objects to this construction because “it fails to tell the jury explicitly that ‘the secondary power source can be the same source of power as the main power source, ' as in Network-1's proposal.” Docket No. 722 at 3. Specifically, Plaintiff objects:

[1] [b]y using the modifiers “main” and “secondary” (rather than “first”/“second”), the claims are drafted such that the “main power source” and the “secondary power source” may be the same, different, or overlapping, as long as they perform their respective functions . . .; and [2] the preferred embodiment expressly uses a single power source as both the “main power source” and the “secondary power source.”

Id. at 3-4.

         Plaintiff's first argument merely rehashes the argument from its claim construction brief. See Docket No. 596 at 13 (“By using the modifiers ‘main' and ‘secondary' (rather than first/second), the claims are drafted such that the ‘main power source' and the ‘secondary power source' may be the same, different, or overlapping, as long as they perform their respective functions.”). As the Report stated, this exact argument was rejected by the court in Cisco, which noted that the terms “main” and “secondary” are not mere identifier terms such as “second” and “third”, but rather, the terms “main” and “secondary” set forth an operational hierarchy. Docket No. 693 at 9 (citing Cisco Markman at 11 (discussing Linear Tech. Corp. v. ITC, 566 F.3d 1049, 1055 (Fed. Cir. 2009))). The Magistrate Judge properly concluded that “main” and “secondary” set forth an operational hierarchy in this case. Docket No. 693 at 9 (citing Cisco Markman at 11).

         Regarding the second point, Plaintiff also made an identical argument in its claim construction brief:

The preferred embodiment in the specification uses a single power source as both the “main power source” and the “secondary power source” . . . .
* * *
Therefore, the specification does not disclaim a device with a single power source that performs all power functions. Instead, it expressly states that a single power source is “the preferred embodiment” in “accordance with the present invention.” Accordingly, Defendants' construction would improperly exclude the preferred embodiment.

Docket No. 596 at 14. The specification refers to a “power source 16.” See '930 Patent at 2:52- 57. Nonetheless, as D-Link, Cisco, and the Report have all discussed, although the power sources may obtain power from a common origin, the “main power source” and “secondary power source” are recited distinctly. D-Link at 6-7; see also Cisco at 12; Docket No. 693 at 9. In other words, Plaintiff has not demonstrated that the specification discloses that the main power source and the secondary power source can be one and the same.

         The Court therefore OVERRULES Plaintiff's objections as to “secondary power source.”

         C. Low Level Current

         Plaintiff next objects to the Report's construction of “low level current” as “a non-data-signal current that is sufficient to begin the start up of the access device but that is not sufficient to sustain the start up.” Docket No. 693 at 12.

Specifically, Plaintiff objects that:
[t]he Report's recommended construction-that a low level current is “sufficient to begin start up of the access device”-is not based on the purpose served by the low level current for the invention, but instead serves the particular purpose of a preferred embodiment, namely the effect of the dc-dc switching supply of the preferred embodiment. This is contrary to controlling Federal Circuit law.

Docket No. 722 at 6 (citing Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005)) (emphasis added).

         As the Report notes, the D-Link and Cisco courts ruled that the patentee used the phrase “low level” to have a particular meaning in the context of the patent-in-suit and the relevant art. See '930 Patent at 3:12-19; see also Cisco Markman at 15-16 (“Thus, the only objective benchmark to guide one skilled in the art is a varying voltage level produced in the return path when the access device is beginning to start up, but is unable to sustain start up. This standard is necessary to guide one skilled in the art in determining a ‘low level current' in the context of the '930 Patent and provides a signpost as to whether an accused device is delivering a low level current from the main power supply.”); D-Link Markman at 8-10. Plaintiff has not persuasively shown any error in this regard.

         Plaintiff's remaining objections to the Report's construction of this term revolve around the prosecution history of the term:

The prosecution history controls the construction of a claim term when the patentee has made a clear and unambiguous disavowal of claim scope . . . . In an IPR [(Inter Partes Review)], Network-1 applied the construction of “low level current” to distinguish the prior art: “the claimed ‘low level current' must be below a threshold level such that it would not, by itself, operate the access device.” . . . “Matsuno does not disclose . . . that the current generated from the 48 volts is insufficient to operate the access devices.” . . . This prosecution history constitutes an unambiguous disclaimer. In addition, during a reexamination proceeding, Network-1 submitted the definition from the IPR proceeding, thereby expressly confirming the meaning of “low level current.” . . . Under controlling Federal Circuit law, when a patentee in a reexamination submits a claim term definition and manifests agreement with it, that definition is binding in any subsequent litigation.

Docket No. 722 at 5.

         However, Plaintiff's reliance on any IPR proceedings does not account for the broader claim construction standard applied in the IPR proceeding. See In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1276-78 (Fed. Cir. 2015), aff'd, Cuozzo Speed Techs., LLC v. Lee, 136 S.Ct. 2131 (2016). Further, whereas Plaintiff has asserted a disclaimer regarding an upper boundary on the “low level current” (as reproduced above), Plaintiff has not shown that the resulting construction in IPR proceedings should somehow operate so as to preclude any lower boundary on the “low level current.”

         The Court hereby OVERRULES Plaintiff's objections as to “low level current.”

         II. Plaintiff's Objections to the Report and Recommendation Regarding Motion forSummary Judgment ...


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