Alarm.Com. Inc. v. Ipdatatel, LLC
| Decision Date | 05 June 2019 |
| Docket Number | Civil Action No. H-18-2108 |
| Citation | 383 F.Supp.3d 719 |
| Parties | ALARM.COM INCORPORATED, and ICN Acquisition, LLC, Plaintiffs, v. IPDATATEL, LLC, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
Christopher D. Mays, Jamie Y. Otto, Mary Audrey Procaccio-Flowers, Ryan R. Smith, James C. Yoon, Wilson Sonsini Goodrich & Rosati, PC, Palo Alto, CA, Gregory Blake Thompson, J. Mark Mann, Mann Tindel Thompson, Henderson, TX, Lisa D. Zang, Wilson Sonsini Goodrich & Rosati, PC, Los Angeles, CA, for Plaintiffs.
Elizabeth Cowan Wright, Andrea L. Savageau, James W. Poradek, Pro Hac Vice, Timothy Michael Sullivan, Irina Vaynerman, Faegre Baker et al, Minneapolis, MN, Andrea Leigh Fair, Ward, Smith & Hill, PLLC, Longview, TX, Cynthia Reba Levin, Moulton, Wilson & Arney, LLP, Houston, TX, Schneider, JD, Pro Hac Vice, Faegre Baker et al, Denver, CO, Jack Wesley Hill, Ward Smith & Hill PLLC, Longview, TX, for Defendant.
When a system is changed and improved using computer technology that already exists, is that improvement patentable? This case raises that question. To decide whether ipDatatel, LLC infringed Alarm.com Incorporated's patents for home-security technology, the court must determine if the technology was patentable in the first place. ipDatatel denies infringement, arguing that the asserted claims cannot be patented under 35 U.S.C. § 101, and moves to dismiss Alarm.com's second amended complaint on that basis. Alarm.com responded, ipDatatel replied, the parties submitted supplemental briefing, and the court heard arguments of counsel. Based on the second amended complaint; the motion, response, reply, and supplemental briefing; the record; counsels' arguments; and the applicable law, the court denies the motion to dismiss. (Docket Entry No. 118). The parties must jointly submit a proposed amended scheduling and docket control order by June 28, 2019 , setting out reasonable, efficient, fair, and cost-effective steps for discovery, dispositive motions, and trial, with deadlines for each.
The reasons for this ruling are explained in detail below.
Alarm.com was incorporated in Delaware in 2000 and introduced its first wireless home-security system in 2003. (Docket Entry No. 46 at ¶¶ 2, 15). Alarm.com's technology integrates a home-alarm system with different "smart" devices, connecting such devices as a tablet computer or a smartphone, into the system, controlled by an application, or "app," that uses an online platform. (Id. at ¶ 14). Alarm.com operates in North and South America and Australia. (Id. at ¶ 16). Its wholly owned subsidiary and coplaintiff ICN Acquisition, LLC owns many of the patents-in-suit. (Id. at ¶ 17).
ipDatatel was incorporated in Texas in 2007. (Id. at ¶ 18). It too manufactures home-security systems and operates data centers for smart-device applications, offering systems with "interactive security capabilities" similar to Alarm.com's home-security systems. (Id. at ¶¶ 19–20). ipDatatel markets its products throughout the United States. (Id. at ¶ 22).
The complaint alleges that the companies compete in the "home security or home automation market," and that the "patents-in-suit... give Alarm.com a competitive edge." (Docket Entry No. 102 at 9:14–15). Alarm.com alleges that ipDatatel infringes U.S. Patent Nos. 7,113,090 ; 7,633,385 ; 7,956,736 ; 8,478,871 ; and 9,141,276. (Docket Entry No. 46 at ¶ 12).
The '090 patent, "System and Method for Connecting Security Systems to a Wireless Device," issued in September 2006. (Id. at ¶ 24). Before this patent, home-security systems typically consisted of a security panel, sensors, and a keypad inside a home. (Id. at ¶ 25). The keypad controlled the system through a central monitor which, when armed, would detect "state changes" from the sensors. (Id. at ¶ 26). The '090 patent inventors recognized that this system did not relay "normal" activity, for example, the opening or closing of a door or window. This capability could provide homeowners useful information when the system was not armed, turning a home-security system into a kind of ever-alert "nanny cam." (Id. at ¶ 27). The patented technology allows both an unarmed and armed system to transmit these and similar events to a database through a modem. (Id. at ¶ 28). A homeowner could monitor not only break-ins, but also such events as when adolescent children returned from a night out, or when a housekeeper arrived or left.
The second amended complaint alleges that by transmitting both "alarm" events and "normal" activity, the '090 patent "extract[s] useful information" from "conventional security panels and sensors," improving "the operation of those security sensors and panels in an unconventional manner." (Id. at ¶ 29). According to the second amended complaint, the prior art "neither taught using normal activity nor expressed any appreciation for the substantial advantages associated with utilizing this data in combination with alarm events." (Id. at ¶ 30). The second amended complaint alleges that the '090 patent addresses "the problems associated with processing and retaining substantial volumes of activity associated with both normal activity and alarm events," because the new system "effectively process[es]" the data "without being overwhelmed." (Id. at ¶¶ 31, 33). The ability to process that information, according to Alarm.com, was "not well-understood, routine, or conventional." (Id. at ¶ 33).
The '090 patent also allows users to create notification preferences. (Id. at ¶ 34). Older systems called the homeowner's landline telephone and, if no one answered, alerted the local police, resulting "in a high occurrence of false alarms" that "deplete[d] police resources and undermine[d] the credibility" of home-security systems. (Id. at ¶¶ 36–38; '090 Patent at 1:39–41). The '090 patent allows homeowners to choose the types of events they want to be notified about, and how and whether to respond—through text message, email, or phone call—before the system contacts law enforcement. (Docket Entry No. 46 at ¶¶ 41–43). The second amended complaint alleges that this notification system was "not well-understood, routine, or conventional in light of the prior art systems." (Id. at ¶¶ 42, 46).
These patents, both entitled "Method and System for Communicating With and Controlling an Alarm System From a Remote Server," issued in December 2009 and June 2011. (Id. at ¶¶ 47–48). The '736 patent, a continuation of the '385 patent, shares its specification. (Id. at ¶ 48). Both "provide an upgrade unit that allows a user to keep an existing legacy alarm system rather than replacing that system." (Id. at ¶ 49).
Before these patents, homeowners had to remove and replace home-security systems to modify or upgrade them. (Id. at ¶ 50). A legacy alarm system usually had a controller connected to sensors throughout the house. (Id. at ¶ 52). Homeowners controlled the system using a keypad connected to the alarm controller through a "keypad bus." (Id. at ¶¶ 53–54). This system communicated with the external monitoring service—a security company—through a public telephone line. (Id. at ¶¶ 55, 61). The second amended complaint refers to the telephone line as a "single point of failure" that, if cut, could "prevent[ ] notification of authorities in the event of a break-in." (Id. at ¶ 62). The second amended complaint alleges that legacy systems could send information out to the external monitoring service but could not be remotely controlled or upgraded. (Id. at ¶¶ 63–64). Newer systems that provide two-way communication between the system and a central monitoring service required removing and replacing the entire existing system. (Id. at ¶¶ 65–66).
The '385 and '736 patents address those shortcomings by allowing homeowners to upgrade legacy systems by "coupling" a new communications unit with the existing keypad bus. (Id. at ¶ 69). The communications unit transmits and receives information through the existing security panel, using the keypad bus in an "unconventional way to achieve unexpected and useful results." (Id. ). The communications unit also connects with a remote server, allowing homeowners to control the system from outside the house. (Id. at ¶ 72). According to Alarm.com's second amended complaint, remote access and control of the system were "not well-understood, routine, or conventional." (Id. ).
The "Gateway Registry Methods and Systems" patent issued in July 2013 and assigns unique serial numbers to "gateways," devices that connect two networks. (Id. at ¶¶ 75, 78). This allows streamlined identification by "gateway registries." (Id. at ¶ 80). The second amended complaint alleges that this identification method was unconventional and reduces gateway registries' computing load. (Id. ).
The "Integrated Interface for a Mobile Device" patent issued in September 2015 and relates to improving how homeowners remotely control their home-security system. (Id. at ¶¶ 83, 84). Before the patent, homeowners could control their security system with only "a dedicated device designed specifically, and exclusively, for the...system." (Id. at ¶ 84). The '276 patent claims software that allows homeowners to control and monitor their system through a smart-device application that synchronizes the smart device to the system. (Id. at ¶ 86). The second amended complaint alleges that "the '276 patent improved the preexisting home security technology...to permit a mobile device running an app[lication] to perform the same functions previously accomplished through a dedicated device." (Id. at ¶ 87). According to the second amended complaint, having different companies monitor the security system and supply the control device were not well-understood, routine, or conventional, and neither was the software enabling the synchronization between the homeowner's...
To continue reading
Request your trial