Absolute Software, Inc. v. Stealth Signal, Inc.

• Decision Date: 21 July 2010
• Docket Number: Civil Action No. H-05-1416
• Citation: 731 F.Supp.2d 661
• Parties: ABSOLUTE SOFTWARE, INC. and Absolute Software Corp., Plaintiffs, v. STEALTH SIGNAL, INC. and Computer Security Products, Inc., Defendants. Stealth Signal, Inc., Counterclaimant, v. Absolute Software, Inc. and Absolute Software Corp., Counterclaim Defendants.
• Court: U.S. District Court — Southern District of Texas

731 F.Supp.2d 661

ABSOLUTE SOFTWARE, INC. and Absolute Software Corp., Plaintiffs,

v.STEALTH SIGNAL, INC. and Computer Security Products, Inc., Defendants.

Stealth Signal, Inc., Counterclaimant,

v.Absolute Software, Inc. and Absolute Software Corp., Counterclaim Defendants.

Civil Action No. H-05-1416.

United States District Court,

S.D. Texas,

Houston Division.

July 21, 2010.

John C. Cave, Ted Dalton Lee, Gunn Lee Cave PC, San Antonio, TX, Marc A. Fenster, Irene Y. Lee, Russ August Kabat, Mark Alan Flagel, Latham & Watkins, Los Angeles, CA, for Plaintiffs and Counterclaim Defendants.

Chris Reynolds, John Scott Black, Reynolds Frizzell Black Doyle Allen & Oldham, Houston, TX, Jeffrey Furr, Attorney at Law Furr Law Firm, Utica, OH, for Defendants.

MEMORANDUM AND ORDER

EWING WERLEIN, JR., District Judge.

Pending are Plaintiffs and Counterclaim Defendants Absolute Software, Inc.'s and Absolute Software Corp.'s Motion for Summary Judgment of Non-Infringement and Invalidity of the Baran Patent (Document No. 221) and Absolute's Cross-Motion for Summary Adjudication of Infringement of U.S. Patent No. 6,507,914 (Document No. 238); and Defendant/Counterclaimant Stealth Signal, Inc.'s Motionfor Summary Judgment of Non-Infringement (Document No. 224) and Motion to Strike Absolute's Cross-Motion for Summary Judgment (Document No. 243). After carefully considering the motions, responses, replies, and the applicable law, the Court concludes as follows.

I. Background

Plaintiffs/Counterclaim Defendants Absolute Software, Inc., and Absolute Software Corp. (collectively, "Absolute"), allege that Defendants Stealth Signal, Inc., and Computer Security Products, Inc. (collectively, "Stealth"), infringe claims of United States Patent No. 6,244,758 (the "'758 Patent"); United States Patent No. 6,300,863 (the "'863 Patent"); and United States Patent No. 6,507,914 (the "'914 Patent"), each of which is assigned to Absolute Software Corp.¹ The ' 758 Patent, consisting of 75 claims, issued on June 12, 2001. The ' 863 Patent, consisting of 94 claims, issued on October 9, 2001. The ' 914 Patent, consisting of 9 claims, issued on January 14, 2003. Each of the patents "relates to a security apparatus and method for retrieving lost or stolen electronic devices, such as portable computers." ' 758 Patent, col. 2, ll. 16-19; ' 863 Patent, col. 2, ll. 27-31; ' 914 Patent, col. 2, ll. 9-11.

Stealth counterclaimed, alleging that Absolute infringes claims in United States Patent No. 5,406,269 (the "'269 Patent"). The '269 Patent was issued to David Baran on April 11, 1995. After Absolute contacted Stealth in August of 2003 asserting that Stealth was infringing Absolute's patents, Stealth searched the prior art, found the '269 Patent, and obtained an exclusive license to it. The '269 Patent generally describes an invention that remotely monitors electronic devices by imbedding in such devices an agent that makes surreptitious calls to a central monitoring site. '269 Patent, col. 2, ll. 50-59.

Absolute now moves for summary judgment that it does not infringe the '269 Patent and that various claims of the patent are invalid. Stealth moves for summary judgment that it does not infringe Absolute's '758, '863, or '914 Patents.²

II. Legal Standards

A. Summary Judgment Standard

Rule 56(c) provides that summary judgment "should be rendered if the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The movant must "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

Once the movant carries this burden, the burden shifts to the nonmovant to show that summary judgment should not be granted. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials in a pleading, and unsubstantiated assertions that a fact issue exists will not suffice. Id. "[T]he nonmoving party must set forth specific facts showing the existence of a 'genuine' issue concerning every essential component of its case." Id.

In considering a motion for summary judgment, the district court must view the evidence "through the prism of the substantive evidentiary burden." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986).All justifiable inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). "If the record, viewed in this light, could not lead a rational trier of fact to find" for the nonmovant, then summary judgment is proper. Kelley v. Price-Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir.1993). On the other hand, if "the factfinder could reasonably find in [the nonmovant's] favor, then summary judgment is improper." Id. Even if the standards of Rule 56 are met, a court has discretion to deny a motion for summary judgment if it believes that "the better course would be to proceed to a full trial." Anderson, 106 S.Ct. at 2513.

B. Infringement Standard

"The patentee bears the burden of proving infringement by a preponderance of the evidence." Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1535 (Fed.Cir.1991) (citing Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1545 (Fed.Cir.1987)). Determination of infringement is a two-step process: (1) claim construction, which is a question of law, and (2) a comparison of the construed claims to the accused product to determine if each claim element is present, either literally or under the doctrine of equivalents, which is a question of fact. IMS Tech., Inc. v. Haas Automation, Inc., 206 F.3d 1422, 1429 (Fed.Cir.2000). The Court previously adopted Special Master Dr. David B. Johnson's Report and Recommendation on Claims Construction as modified by his Amendment to Report and Recommendation on Claims Construction.³

Literal infringement occurs when each properly construed claim element "reads on," or in other words is found in, the accused product or method. Allen Eng'g Corp. v. Bartell Indus., 299 F.3d 1336, 1345 (Fed.Cir.2002). On the other hand, "[a] finding of infringement under the doctrine of equivalents requires a showing that the difference between the claimed invention and the accused product or method was insubstantial or that the accused product or method performs the substantially same function in substantially the same way with substantially the same result as each claim limitation of the patented product or method." AquaTex Indus., Inc. v. Techniche Solutions, 479 F.3d 1320, 1326 (Fed.Cir.2007). Equivalents are assessed on a limitation-by-limitation basis. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 117 S.Ct. 1040, 1046-47, 137 L.Ed.2d 146 (1997). "The question of whether an explicit function has been identified with a claim limitation entails an examination of the claim and the explanation of it found in the written description of the patent." Vehicular Techs. Corp. v. Titan Wheel Int'l, Inc., 141 F.3d 1084, 1090 (Fed.Cir.1998); see also Warner-Jenkinson, 117 S.Ct. at 1054 ("An analysis of the role played by each element in the context of the specific patent claim will thus inform the inquiry as to whether a substitute element matches the function, way, and result of the claimed element."). "In other words, if a claim limitation must play a role in the context of the specific claim language, then an accused device which cannot play that role, or which plays a substantially different role, cannot infringe under the doctrineof equivalents." Vehicular Techs., 141 F.3d at 1090.

III. Absolute's Motion for Summary Judgment of Non-Infringement and Invalidity of the '269 Patent

A. "Semi-Random Rate"

Absolute moves for summary judgment that its products do not infringe Claims 12 and 25 (or the claims dependent therefrom) of the '269 Patent because its products do not meet the "semi-random rate" requirement. Claims 12 and 25 provide that the '269 agent will transmit messages to the central site at a "semi-random rate." Claim 12 of the '269 Patent includes the following:

[T]ransmission means for initiating, at a semi-random rate, the transmission of the message packet from the formatting means to the central site means of the system surreptitiously of a user of said electrical apparatus.

'269 Patent, col. 10, ll. 8-12 (emphasis added). Claim 25 is a method claim providing:

[S]aid remote site monitoring means initiating transmission, at a semi-random rate, of said message packet ... to the central site monitoring means.

Id., col. 11, ll. 40-43 (emphasis added). The Court construed "semi-random rate" to mean "normally taking place exactly once at a randomly chosen time during each occurrence of a repeating predetermined time interval." ⁴

Absolute's products are programmed to attempt initiation of a call to Absolute's Monitoring Center exactly 24.5 hours after the end of the last call. ⁵ Stealth asserts that fact issues exist regarding whether this design infringes the semi-random rate limitation of Claims 12 and 25 of the ' 269 Patent, either literally or under the doctrine of equivalents.

1. Literal Infringement

Absolute's products do not literally infringe the semi-random rate element. First, the transmissions from Absolute's agents to the Monitoring Center are not random. The Amendment to Report and Recommendation on Claims Construction explains that the '269 Patent is designed to "make 'one, and only one, call during the selected period,' " such as day/week/month, "at a time 'uniformly randomly distributed over the selected time interval.' " ⁶ Stealth argues that Absolute's products call once a day:

For Absolute's products, the 'repeating predetermined time

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