3RD Eye Surveillance, LLC v. United States
| Decision Date | 25 September 2018 |
| Docket Number | No. 15-501C,15-501C |
| Parties | 3RD EYE SURVEILLANCE, LLC and DISCOVERY PATENTS, LLC, Plaintiffs, v. UNITED STATES, Defendant, and ELBIT SYSTEMS OF AMERICA, LLC, GENERAL DYNAMICS ONE SOURCE LLC, NORTHROP GRUMMAN SYSTEMS CORPORATION, and VIDSYS, INC., Defendant-Intervenors. |
| Court | Court of Federal Claims |
Claims of patent infringement; 28 U.S.C. § 1498(a); patentability; 35 U.S.C. § 101; second step of the Alice test; application of Aatrix; leave to amend complaint; RCFC 15(a)(2); claim construction
Steven A. Kennedy, Kennedy Law, P.C., Dallas, Texas, for plaintiffs.
Lee Perla, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were David A. Foley, Jr., Trial Attorney, Commercial Litigation Branch, Gary L. Hausken, Director, Commercial Litigation Branch, Civil Division, and Chad A. Readler, Acting Assistant Attorney General, Civil Division, United States Department of Justice, Washington, D.C.
Kurt G. Calia, Covington & Burling LLP, Redwood Shores, California, for defendant-intervenor Elbit Systems of America, LLC.
Scott Andrew Felder, Wiley Rein, LLP, Washington, D.C., for defendant-intervenor General Dynamics One Source LLC.
Gregory H. Lantier, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C., for defendant-intervenor Northrop Grumman Systems Corporation.
David Rene Yohannan, Quarles & Brady LLP, Washington, D.C., for defendant-intervenor Vidsys, Inc.
Pending before the court in this patent infringement action are three matters linked by the procedural setting of this case. Plaintiffs are the patent holder and the assignee of three patents, Nos. 6,778,085 (the "'085 patent"), 6,798,344 (the "'344 patent"), and 7,323,980 (the "'980 patent"), each relating to security systems with attendant imagery capabilities. Plaintiffs assert that their intellectual property is being infringed by security systems in use in secured locations owned, operated, or managed by or for the United States. See Pls.' First Am. Compl. ("Am. Compl.") ¶ 9, ECF No. 22.1 Defendant-intervenors are suppliers of various hardware, software, or information technology ("IT") services to the federal government who have been given notice to intervene in this matter as a result of indemnity clauses in their respective contracts with the United States. See, e.g., Def.'s Unopposed Mot. For Leave of Ct. to Notice Additional Third Parties at 4 (), ECF No. 79.
The United States sought to have notice issued to a number of government contractors who could potentially be required to indemnify the United States, see ECF Nos. 23, 25, 30, 79, 163, & 183, and, upon approval by the court, notice was eventually issued to 14 such entities, see ECF Nos. 42-49, 82-85, 165, & 191. Of the various contractors to whom notice issued, ten eventually joined in this action. See ECF Nos. 54, 57, 64, 67, 70, 78, 94, 97, 100, & 102. Of this group, a number were thereafter dismissed without prejudice as it became apparent to plaintiffs that various defendant-intervenors were not infringing based on available information. See ECF Nos. 132 (), 147 (motion to dismiss Datawatch Systems, Inc.), & 171 (motion to dismiss Tyco Integrated Security LLC). At present, the remaining defendant-intervenors are, as listed in the caption of the case, Elbit Systems of America, LLC, General Dynamics One Source, LLC, Northrop Grumman Systems Corporation, and Vidsys, Inc.
The matters currently pending for resolution by the court are (1) Defendant-Intervenor Northrop Grumman Systems Corporation's ("Grumman") Motion for Judgment on thePleadings, ("Def.-Intervenors' Mot."), ECF No. 194, in which the United States and all defendant-intervenors join, (2) Plaintiffs' Rule 15(a)(2) Motion for Leave to Amend Complaint, ECF No. 205 ( ); see also [Plaintiffs' Proposed] Second Amended Compl. ("[Proposed] Second Am. Compl."), ECF No. 221, and (3) claim construction for the patents plaintiffs assert are infringed.
These three matters are linked procedurally, and thus properly before the court concurrently, by virtue of recent precedent of the United States Court of Appeals for the Federal Circuit that specifies that the court "cannot adopt a result-oriented approach to end patent litigation at the Rule 12(b)(6) stage that would fail to accept as true the complaint's factual allegations and construe them in the light most favorable to the plaintiff, as settled law requires," Aatrix Software, Inc. v. Green Shades Software, Inc., 890 F.3d 1354, 1358 (Fed. Cir. 2018) ("Aatrix II") (), particularly where the operant inquiry is whether patent claims survive the second step of the Alice test, see Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. ___, ___, 134 S.Ct. 2347, 2355 (2014) () (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 77-79 (2012)). Because courts "should freely give leave [to amend pleadings] when justice so requires," RCFC 15(a)(2), it is an abuse of discretion to deny leave to amend where the proposed amendments allege facts sufficient to raise an issue of an inventive concept sufficient to survive a Rule 12 motion at a preliminary stage of the proceedings, see Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1126-28 (Fed. Cir. 2018) ("Aatrix I"). Thus, the court looks at these issues at the same time.
A technical tutorial on the technology underlying the patents at issue was held on July 2, 2018. A hearing on claim construction was held on July 31, 2018, at which the motion to amend and motion for judgment on the pleadings were also addressed. Expert testimony was received at both the technical tutorial and the hearing. Accordingly, the parties' motions are ripe for resolution, as are the parties' contentions regarding the proper construction of the patent claims at issue.
Plaintiffs initially filed suit in this court on May 15, 2015, thereafter submitting an amended complaint on January 26, 2016. Plaintiffs allege that "[t]he [g]overnment operates a series of security systems in airports, office buildings, and other locations that the [g]overnment considers . . . require monitoring," that "[t]he [g]overnment operates security systems at numerous secured locations, including . . . airports, [f]ederal [c]ourts, and other government office buildings," and that these systems infringe plaintiffs' patents—the '085, '344, and '980 patents. See Am. Compl. ¶¶ 9, 12. These contentions have been the subject of extensive proceedings in the intervening years, culminating in three published opinions by this court addressing various motions made by the parties as the case progressed through preliminary discovery and towards claim construction, also taking into account six separate applications post-complaint for inter partes review filed by the United States with the Patent Trial and Appeal Board ("PTAB"). See Joint Prelim. Status Report at 4 & n.2, ECF No. 51.
The first contested matter that required the court's resolution was the government's motion for more definite statement, ECF No. 9, filed concurrently with a motion to dismiss for lack of subject matter jurisdiction, ECF No. 8. See Def.'s Mot. for a More Definite Statement at 1 n.1 (). In these motions, the United States contended that "[b]ecause the Complaint fails to identify an accused[ly infringing] surveillance system, a more definite statement is necessary to provide minimal fair notice in this case." Id. at 1. In the course of briefing these related motions, "the government . . . concede[d] that plaintiffs have standing to bring the present suit," and the court accordingly denied the government's motion to dismiss for lack of subject matter jurisdiction that had been filed on that ground. See 3rd Eye Surveillance, LLC v. United States, 124 Fed. Cl. 438, 440-41 (2015). The government's motion for a more definite statement, however, was granted "because the complaint does not specifically identify the accused system '[leaving] the government [] to guess what systems allegedly infringe on the asserted patents." Id. at 442. The court directed "plaintiffs to amend their complaint to explain why they believe that certain government agencies and third-party contractors to the government have infringed the patents at issue . . . [; specifically,] plaintiffs should submit an amended complaint that provides the government with the publicly available information upon which they relied to bring their claims before the court." Id. at 440. The resulting amended complaint, plaintiffs' Amended Complaint of January 26, 2016, is currently the operative version while plaintiffs' motion to amend is pending.
After plaintiffs filed their Amended Complaint, the United States filed a suite of motions to notify various government contractors, who, the government asserted, "pursuant to the patent indemnity clause in each underlying contract . . . may have an interest in the subject matter of this suit." E.g., Def.'s Opposed Mot. to Notice Third Parties at 3, ECF No. 23 (seeking to notice former defendant-intervenors IndigoVision, Ltd. and Datawatch Systems, Inc.). The court held a hearing on the government's initial motions on...
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