Bell Atlantic Network Serv. V. Covad Commun. Group

• Decision Date: 04 April 2000
• Docket Number: No. CIV. A. 2:99CV712.,CIV. A. 2:99CV712.
• Citation: 92 F.Supp.2d 483
• Parties: BELL ATLANTIC NETWORK SERVICES, INC., Plaintiff, v. COVAD COMMUNICATIONS GROUP, INC. et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

92 F.Supp.2d 483

BELL ATLANTIC NETWORK SERVICES, INC., Plaintiff, v. COVAD COMMUNICATIONS GROUP, INC. et al., Defendants.

No. CIV. A. 2:99CV712.

United States District Court, E.D. Virginia, Norfolk Division.

April 4, 2000.

Stanley G. Arr, Jr., Kaufman & Canoles, Norfolk, VA, Richard Cyril Sullivan, Jr., Reed Smith Hazel & Thomas LLP, Falls

Church, VA, Dan K. Webb, George Lombardi, Winston & Strawn, Chicago, IL, Stephen Edward Noona, Kaufman & Canoles, PC, Norfolk, VA, Richard G. Taranto, Farr & Taranto, Washington, DC, for Bell Atlantic Network Services, Inc.

Charles Anthony Jones, Ross, Dixon & Masback, William Dewar Hopkins, Ross, Dixon & Masback, L.L.P., Washington, DC, Alan Dale Albert, George H. Bowles, Mays & Valentine, Norfolk, Ruffin B. Cordell, Fish & Richardson, John R. Gerstein, Charles I. Hadden, Merril J. Hirsh, Ross Dixon & Bell, Washington, DC, Brad M. Sonnenberg, Bernard Chao, Covad Communications Co., Santa Clara, CA, for Covad Communications Group, Inc., Covad Communications Company, Inc., Dieca Communications, Inc. dba Covad Communications Company, defendants.

OPINION AND ORDER

FRIEDMAN, District Judge.

On January 13, 2000, Bell Atlantic Network Services, Inc. ("Bell Atlantic") filed a motion for summary judgment on Covad Communications Group, Inc., Covad Communications Company, Inc., and DIECA Communications, Inc.'s (collectively "Covad") seventh (estoppel) and ninth (implied license) affirmative defenses. On January 14, 2000, Bell Atlantic filed a motion for summary judgment on Covad's fifth (patent misuse) affirmative defense. On January 14, 2000, Bell Atlantic filed a motion for summary judgment on Covad's eighth (Telecommunications Act) affirmative defense. On January 20, 2000, Covad filed a motion for summary judgment of noninfringement of claims 1, 5, 7, 8, 9, and 21 of the '786 patent. On January 27, 2000, Covad filed a motion for summary judgment on its eighth (Telecommunications Act) affirmative defense. A hearing was held on these motions on February 11, 2000. On February 18, 2000, the Court sent a letter to the parties as a courtesy to inform them of the Court's decision to grant Covad's motion for summary judgment of noninfringement. On February 25, 2000, Bell Atlantic filed a motion for leave to file a supplemental memorandum establishing that Covad's own experts reject and contradict Covad's key noninfringement argument. For the reasons set forth below, Covad's motion for summary judgment of noninfringment is GRANTED. The remaining motions for summary judgment are moot in light of the Court's ruling on Covad's motion for summary judgment of noninfringement. Accordingly, these motions need not be addressed by the Court. Bell Atlantic's motion for leave to file a supplemental memorandum is DENIED.

Factual and Procedural Background

I. The Lawsuit

Bell Atlantic filed its application for U.S. Patent No. 5,812,786 ("the '786 patent") with the United States Patent and Trademark Office ("PTO") on June 21, 1995. The patent is entitled "Variable Rate and Variable Mode Transmission System," and describes asymmetrical digital subscriber line interface units operating at variable rates and in variable modes (ADSL/AVR) over a local loop. The PTO allowed the claims in the '786 patent on October 15, 1997. The patent was issued on September 22, 1998. Specifically, the '786 patent contains two independent claims at issue in this case¹: claim 1 and claim 21.

Independent claim 1 recites the following:

A transmission system for variably transmitting information data in a plurality of different modes over a network, said transmission system comprising:

a first transceiver, connected to a first end of a subscriber loop, for selectively operating in one of said plurality of different modes, said first transceiver transmitting or receiving signals, at a first transmission rate, on a first channel, and transmitting or receiving signals, at a second transmission rate, on a second channel, in each of said plurality of different modes;

a second transceiver, connected to said first transceiver via said subscriber loop, for selectively operating in one of said plurality of different modes, said second transceiver transmitting or receiving said first channel signals at said first transmission rate on said first channel and transmitting or receiving said second channel signals at said second transmission rate on said second channel; and

a controller connected to said first transceiver for selectively changing said first and second transmission rates.

Col. 17, ll. 5-23.

Independent claim 21 states the following:

An ADSL/AVR transmission system for variably transmitting information data over a plurality of channels, comprising: a first ADSL/AVR transceiver for transmitting or receiving signals at a first transmission rate on a first channel, and transmitting or receiving signals at a second transmission rate on a second channel;

a second ADSL/AVR transceiver for transmitting or receiving signals at said first transmission rate on said first channel and transmitting or receiving said second channel signals at said second transmission rate on said second channel; and

a subscriber loop for connecting said first and second ADSL/AVR transceivers together; wherein

each of said first and second ADSL/AVR transceivers includes a controller for selectively changing the transmission rates on said first and second channels.

Col. 19, ll. 27-44.

The Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56, requires companies such as Bell Atlantic ("incumbent local exchange carriers" or "ILECs") to provide access to their network to any competitive local exchange carrier ("CLEC"). Pursuant to this statute, Bell Atlantic and Covad, a CLEC that provides digital subscriber line ("DSL") services, have negotiated a series of "interconnection" agreements, on a state-by-state basis, affording Covad access to Bell Atlantic's network and allowing it to collocate equipment in Bell Atlantic's central offices. Bell Atlantic offers its "InfoSpeed DSL" service in Northern Virginia and elsewhere throughout the Mid-Atlantic and Northeastern states. See Complaint, at ¶ 11. Covad did not even come into existence until 1996, and it did not begin to offer commercial services until December 1997, well after the application had been filed for what would become the '786 patent.

In May of 1999, eight months after the '786 patent issued, and two weeks after Covad filed an antitrust action alleging that Bell Atlantic is seeking to monopolize the markets related to DSL services,² Bell Atlantic brought this action to enforce its patent against Covad. Having originally identified three of the 26 patent claims as infringed by Covad (claims 1, 5, and 7), Bell Atlantic subsequently asserted infringement of three additional claims (claims 8, 9, and 21). Bell Atlantic asserts that Covad currently offers the Telespeed® and Telesurfer^SM DSL services³ in direct competition with Bell Atlantic's DSL services in Northern Virginia and elsewhere in the United States. See Complaint, at ¶ 13. Covad has made no effort to obtain a license for the '786 patent and is not presently licensed under the patent. See id. In essence, this dispute centers around Bell Atlantic's assertion that Covad's DSL service infringes on Bell Atlantic's '786 patent. If the Court interprets the disputed claim terms as argued by Covad in its motion for summary judgment of noninfringement, the ultimate conclusion would be that Covad's DSL services employ technology that is different from, and, therefore, not covered by Bell Atlantic's '786 patent. As a result, no infringement could occur since Covad is utilizing technology that is beyond the scope of Bell Atlantic's "right to exclude" as defined by, and limited to the claims in the '786 patent.

II. The Technology⁴

Bell Atlantic and Covad operate high speed data networks by using "digital subscriber line" ("DSL") technology.⁵ The DSL system consists of two high speed modems located at each end of a conventional telephone line, one DSL modem at the telephone company's end, and one at the customer's end. At the telephone company's end, a "DSLAM" ("digital subscriber line access multiplexer") manages the flow of data to and from the DSL modem. The DSL modem at the telephone company's end is usually contained within a circuit card that fits into the DSLAM. The actual circuitry responsible for transmitting and receiving data over the telephone line is a "transceiver." The DSL modem at the customer's end is known as a "CPE" ("customer premise equipment"). In DSL, as in other forms of modem communication, transmission rates are measured in kilo-bits per second ("Kbps") or mega-bits per second ("Mbps").

Common residential telephone service is known as "POTS" ("Plain Old Telephone Service"). POTS is carried over twisted pair copper wires between the telephone company's central office and the customer's home. The sound of the caller's voice is transmitted over the twisted pair. POTS occupies only a small portion of the total capacity of the twisted pair, and additional communications can be carried on the same wire by using a technique known as "frequency division multiplexing."⁶ The total spectrum is divided into numerous channels, and "bandwith" refers to the amount of frequency band allocated to a particular channel.

Figure 4 of the '786 patent illustrates how prior art telephone lines have been divided into channels using frequency division multiplexing. See Fig. 4 (attached). At the low end of the frequency spectrum, the POTS channel or an ISDN circuit is given about four kilohertz (4KHz) of the available spectrum. This two-way channel is labeled as channel 302. See col. 8, ll. 44-46. Above that, the "upstream" channel, defined as the channel carrying communications from the customer to the phone company, is assigned the frequency range from 83 KHz to about 98 KHz. This upstream channel is labeled as control...