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Convolve, Inc. v. Dell Inc.

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

June 7, 2017

CONVOLVE, INC.
v.
DELL INC., ET AL.

          MEMORANDUM OPINION

          ROY S. PAYNE JUDGE

         Before the Court are the Motion for Reconsideration (Dkt. No. 698) filed by Plaintiff Convolve Inc. and the Motion for Relief From Judgment (Dkt. No. 720) filed by Western Digital Corporation, Hitachi Global Storage Technologies, Inc., and Hitachi Ltd. (the “HDD Defendants”).

         BACKGROUND

         This dispute involves two convolved cases: this case and the concurrently related case, Convolve, Inc v. Compaq Computer Corp., 1:00-cv-05141 (S.D.N.Y.).

         On July 13, 2000, Convolve sued Compaq Computer Corp.; Seagate Technology, LLC; and Seagate Technology, Inc. (collectively “Seagate”) in the Southern District of New York for, among other things, infringement of United States Patent No. 6, 314, 473 (the “'473 Patent”) entitled “System For Removing Selected Unwanted Frequencies In Accordance With Altered Settings In A User Interface Of A Data Storage Device.” The ‘473 patent generally discloses systems and methods for reducing unwanted vibrations in computer disk drives and teaches that a user interface can be employed to allow a user to choose to make a drive run in a faster but louder mode or in a slower but quieter mode. (‘473 Patent at 3:60-4:5). Relevant here, on August 9, 2005, the court in the New York Action construed the term “user interface” to mean “hardware, firmware, or a combination thereof that allows a person, directly or indirectly, to alter parameters.” Convolve, Inc. v. Compaq Computer Corp., 2005 WL 1902921, at *15 (S.D.N.Y. Aug. 9, 2005).

         This case began on June 18, 2008, when Convolve filed a patent infringement action in this Court against Defendants Dell Inc., Western Digital Corporation, Hitachi Global Storage Technologies, Inc., and Hitachi Ltd. (collectively, “Defendants”) (Dkt. No. 1). As later reflected in the Second Amended Complaint, Convolve alleged that Defendants directly, indirectly, and willfully infringed the ‘473 Patent. Specifically, Convolve alleged that (1) Dell made, used, sold, offered for sale, and/or distributed in the United States personal computers incorporating utility software and/or hard disk drives that infringe the claims of the ‘473 Patent and (2) the HDD Defendants made, used, sold, offered for sale, and/or distributed in the United States hard disk drives that infringe the claims of the ‘473 Patent. (See Dkt. No. 383).

         On January 5, 2011, the court construed the claims in this case. Relevant here, the Court adopted a construction of “user interface” that differed from the construction in the New York Action. In this case, the Court construed “user interface” to mean “control (e.g. software, hardware, firmware, or a combination thereof) that allows a person to alter operational parameters.” (Dkt. No. 211 at 17). After claim construction in this case, the HDD Defendants moved for summary judgment of non-infringement, asserting that the hard disk drives did not meet the construed “user interface' limitation of the asserted claims. The Court denied those motions. Relevant here to the Motion for Relief From Judgment, the court stated that “[b]ased on the evidence that Plaintiff has adduced, a jury could reasonably find that the ATA interface is a ‘user interface' as construed by this court.” (Dkt. No. 471 at 1); (Dkt. No. 475.)

         The parties tried this case to a jury in July 2011 with Magistrate Judge Everingham presiding. The jury found the ‘473 patent valid and willfully infringed, and it awarded lump sum damages against Defendants. (See Dkt. No. 523). The parties then filed various post-trial motions. While such motions were pending, this case was reassigned: first to Judge Folsom (Dkt. No. 630, then to Judge Gilstrap on December 19, 2011, and then on January 3, 2012, referred to the undersigned. (Dkt. No. 634.)

         Meanwhile, in August 2011, the district court in the New York Action granted summary judgment against Convolve and in favor of hard-drive manufacturer Seagate, concluding that the bare Seagate hard-drives did not infringe claims 1, 3, 4, and 7-15 of the ‘473 patent. Convolve, Inc. v. Compaq Computer Corp., 2011 WL 7144803, at *23 (S.D.N.Y. October 6, 2011). The New York district court concluded that no reasonable juror could find that the accused Seagate hard-drives “selected unwanted frequencies” because the accused products reduced only one frequency and the claim required the reduction of more than one frequency. Convolve, Inc. v. Compaq Computer Corp., 527 F. App'x 910, 926 (Fed. Cir. 2013). On appeal, the Federal Circuit reversed and remanded the case. The Federal Circuit identified evidence in the record that a Seagate disk drive engineer may not have solely targeted a single frequency, id. At 926-27, and source code suggesting that the accused products reduced a range of frequencies, not just a single one, id. At 927. Based on this evidence, the Federal Circuit identified genuine disputes of material facts precluding summary judgment. Id. at 928. The Federal Circuit also reversed summary judgment of non-infringement on Convolve's inducement claims. It found that press releases, end-user instructions, and distributed tools that allowed and even encouraged computer users to select between different performance levels of the disk drives was enough evidence to preclude summary judgment on its inducement claims. Id. at 929.

         Returning to this case, on May 20, 2014, this Court directed the parties to file briefs addressing whether the record contained a factual basis for finding that method claims 7 and 10 of the ‘473 patent were directly infringed, and if so, how a judgment as a matter of law against Convolve on these claims would affect damages. (Dkt. No. 660.) In response, Convolve pointed to record evidence showing that Western Digital tested 27 hard drives to determine the loudness of the drives. (Dkt. No 661 at 6-7.) Convolve's submission made clear that “[t]he user interface in a Western Digital hard drive is the ATA interface” that could be accessed through “various utility programs.” (Id.) Convolve argued similarly with respect to the Hitachi Defendants. (Id. at 8-9.) Convolve asserted that the damages award would be unaffected by a JMOL of direct infringement against Convolve on claims 7 and 10 because (1) the jury found that the HDD Defendants infringed four other independent claims and (2) the jury also found that the HDD Defendants indirectly infringed 7 and 10.

         Defendants disputed the sufficiency of that evidence. First, Defendants argued that the documents identified by Convolve do not identify the location at which the tests were performed. (Id. at 663.) Defendants asserted that both Western Digital and Hitachi are large corporations with many large offices outside the United States and identified evidence in the record to suggest that the foreign plants have “complete responsibility” for the production of the accused hard drives. (Dkt. No. 663 at 10.) Defendants also asserted that Convolve's evidence was insufficient to show that the tests “reduce[d] selected unwanted frequencies” or that a user interface was used to alter settings and change a drive's seek mode. Defendants agreed, however, that in the event of a JMOL of direct infringement against Convolve on claims 7 and 10, the damages award should remain the same. (Id. at 14.)

         Back in the New York Action, on July 11, 2014 - while Defendants' Rule 50(b) motions on non-infringement were still pending in this case - the district court granted summary judgment of non-infringement against Convolve a second time. Convolve, Inc. v. Compaq Computer Corp., 33 F.Supp.3d 316 (S.D.N.Y. 2014) (the “Second Summary Judgment”). The Court held that “[a]pplying the proper construction to the undisputed facts establishes that the ATA and SCSI disk drives, by themselves, do not meet the “user interface” claim limitation and therefore cannot support a finding of infringement of this element.” Id. at 325. In view of the Second Summary Judgment, Defendants moved in this case to supplement their pending Rule 50(b) motions of non-infringement (see Dkt. Nos. 664, 667), which Convolve opposed.

         Then on February 11, 2015, this Court denied Defendants' Rule 50(b) motions in this case. (Dkt. No. 676-678.) The Court did so relying on its prior construction of “user interface.” (Dkt. No. 676 at 5.) Specifically, the Court noted that “[t]he item Convolve identified at trial as the ‘user interface' was the ATA interface” and rejected the argument that Convolve had not proven that the ATA interface was accessible to the end-user, relying on this Court's previous construction of “user interface.” (Dkt. No. 678 at 5-6.) On March 13, 2015, Defendants then appealed this Court's rulings on Defendants' Rule 50(b) motions. (Dkt. No. 683-685.)

         On March 30, 2015, the Court denied Dell's Motion for Reconsideration and Entry of Judgment in Favor of Dell on Collateral Estoppel Grounds, which Dell had filed one day prior to its appeal to the Federal Circuit. (Dkt. No. 694.) The Court did so, stating that “[w]ith regard to liability, the finding in the New York Action was fundamentally different: it targeted different accused products, different conduct, and the factual record before each Court was distinct. Indeed, the Court in the New York Action explicitly found as much. (Dkt. No. 694) (citing New York Action, Dkt. No. 1054 at 22, n. 24.) However, with respect to enhanced damages in light of the jury's willfulness finding, the Court expressly opined that it was appropriate to factor the judgment in the New York Action into the decision not to enhance damages. (Dkt. No. 694 at 1-2.) The Court entered a Corrected Final Judgment on March 31, 2015 against ...


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