Epicrealm, Licensing, LLC v. Autoflex Leasing

• Decision Date: 26 June 2007
• Docket Number: No. 2:05CV163.,No. 2:05CV356.,2:05CV163.,2:05CV356.
• Citation: 492 F.Supp.2d 608
• Parties: EPICREALM, LICENSING, LLC v. AUTOFLEX LEASING, INC., et al. epicRealm, Licensing, LLC v. Franklin Covey Co., et al.
• Court: U.S. District Court — Eastern District of Texas

492 F.Supp.2d 608

EPICREALM, LICENSING, LLC v. AUTOFLEX LEASING, INC., et al.

epicRealm, Licensing, LLC v. Franklin Covey Co., et al.

No. 2:05CV163.

No. 2:05CV356.

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

June 26, 2007.

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Larry Dean Carlson, Kevin James Meek, Baker Botts, Dallas, TX, Andrew Wesley Spangler, Elizabeth L. Derieux, Sidney Calvin Capshaw, III, Brown McCarron, Thomas John Ward, Jr., Ward & Smith Law Firm, Longview, TX, Deborah J. Race, Otis W. Carroll, Jr., Ireland Ca/Toll & Kelley, Tyler, TX, Franklin Jones, Jr., Jones & Jones, Marshall, TX, Jeffrey Wayne Moles, Quinn Emanuel Urquhart Oliver & Hedges, LLP, New York, NY, for Epicrealm, Licensing, LLC.

Charles Ainsworth, Parker Bunt & Ainsworth, Tyler, TX, Eric M. Albritton, Attorney at Law, Longview, TX, Ira P. Rothken, Rothken Law Firm, San Rafael, CA, Margaux A. Aviguetero, Otto 0. Lee, Intellectual Property Law Group, LLP, San Jose, CA, Matthew Richard Rodgers, Williams Morgan & Amerson PC, David J. Beck, Beck Redden & Secrest, Houston, TX, J. Stephen Ravel, Jonathan M. Buck, Kelly Hart & Hallman, Joseph Roger Williams, Jr., Andrews Kurth LLP, Austin, TX, Aaron Levangie, William D. Belanger, Pepper Hamilton LLP, Boston, MA, Damon Michael Young, Lance Lee, Young Pickett & Lee, Texarkana, TX, Charles Samuel Cotropia, Kristoffer B. Leftwich, Sidley Austin Brown & Wood, Kenneth Robert Adamo, Jones Day, Paul Alexander Bezney, Tracy Lynn Stoker, Adkerson, Hauder & Bezney, Dallas, TX, A. Gregory Gibbs, Ognjan V. Shentov, Richard H. An, Jones Day, New York, NY, Carl R. Roth, Michael Charles Smith, The Roth Law Firm, P.C., Marshall, TX, William J. Brown, Jr., Jones Day, Irvine, CA, Ludwig E. Kolman, Pope Cahill & Devine Ltd., Robert S. Beiser, Stanley B. Block, Vedder Price Kaufman & Kammholz, Chicago, IL, Michael W. Tieff, Steven J. Bocci, Woodcock Washburn LLP, Philadelphia, PA, Tyler Alexander Baker, Fenwick & West, Mountain Valley, CA, Michael J. Sacksteder, Fenwick & West, San Francisco, CA, for Autoflex Leasing, Inc., et al. and Franklin Covey Co., et al.

MEMORANDUM ORDER

FOLSOM, District Judge.

The above-entitled and numbered civil action was heretofore referred to United States Magistrate Judge Caroline M. Craven pursuant to 28 U.S.C. § 636. The Report of the Magistrate Judge which contains her proposed findings of fact and recommendations for the disposition of such action has been presented for consideration. Plaintiff epicRealm Licensing, LLC ("Plaintiff') filed objections to the Report and Recommendation of the Magistrate Judge. The Court conducted a de novo review.

BACKGROUND

[E]picRealm Licensing, LLC ("Plaintiff' or "epicRealm") sued The Macerich Company ("Macerich") and other unrelated companies (collectively "Defendants"), alleging Defendants are infringing United States Patent Nos. 5,894,554 (the "'554 patent") and 6,415,335 (the "'335 patent") (collectively the "Patents"). The Patents allegedly encompass certain systems and methods to dynamically generate web pages. Plaintiffs Patents purport to cover a process in which a web server interacts with a page server and other data sources to generate dynamic web pages that are subsequently transmitted over the Internet.

REPORT AND RECOMMENDATION

In her Report and Recommendation dated February 21, 2007, the Magistrate Judge recommended Macerich's Motion for Summary Judgment of No Infringement be granted and that Plaintiffs aboveentitled and numbered cause of action against Macerich be dismissed with prejudice. Specifically, regarding direct infringement, the Magistrate Judge found no genuine issues of material fact regarding whether Macerich performs any of the steps of the claimed methods. Therefore, the Magistrate Judge concluded Macerich cannot be liable for direct infringement of those claims as a matter of law. Regarding indirect infringement (inducing infringement), the Magistrate Judge found insufficient evidence to demonstrate that Macerich had specific intent to cause the acts which constitute the infringement. The Magistrate Judge further found there are no genuine disputes of material fact on the issue of whether Macerich intended to induce infringement. Therefore, the Magistrate Judge concluded Macerich cannot be liable for active inducement as a matter of law.

PLAINTIFF'S OBJECTIONS

Plaintiff filed objections to the Magistrate Judge's recommendation that Macerich's motion for summary judgment of no infringement be granted. Specifically, Plaintiff raises the following three primary objections to the Magistrate Judge's Report and Recommendation. First, Plaintiff asserts the Magistrate Judge's direct infringement analysis improperly applied the statutory mandate of 35 U.S.C. § 271(a) by focusing only on whether Macerich directed or controlled its web hosting services provider — Red 5 Interactive, Inc. ("Red 5") — in making one of the infringing systems named in Plaintiffs Preliminary Infringement Contentions ("PICs") — the system including Apache and Tomcat software. According to Plaintiff, making the software is only one way to infringe Plaintiffs patents under 35 U.S.C. § 271(a), and Macerich is also liable for infringement by using the infringing systems and methods. Plaintiff argues the Magistrate Judge's analysis ignored evidence showing that Macerich used the infringing combination of Apache and Tomcat software.

Second, Plaintiff contends the Magistrate Judge incorrectly required Plaintiff to produce evidence that Macerich directed Red 5 to "customize" the infringing combination of Apache and Tomcat software. According to Plaintiff, its PICs accuse Macerich of infringement by employing a system that used an Apache web server in combination with a Tomcat page server, and neither Plaintiff's patents nor its PICs require that Macerich "customize" the Apache/Tomcat combination. Again, Plaintiff argues the use of the combination, by itself, is sufficient for infringement.

Third, Plaintiff asserts the Magistrate Judge's analysis of infringement by inducement improperly applied the statutory mandate of 35 U.S.C. § 271(b) by again focusing only on whether Macerich induced Red 5 in making the infringing system. Plaintiff states the analysis did not consider evidence that Macerich induced web patrons to use the allegedly infringing combination of Apache and Tomcat software when browsing Macerich's websites.

DE NOVO REVIEW

The Court first notes that Plaintiff, in its objections, attempts to raise new factual and legal issues by putting forth entirely new arguments that have never before been briefed. Through four separate legal briefs arguing its position and at oral argument, Plaintiff has focused on Macerich's connection and dealings with Red Five as its sole basis for arguing Macerich is liable for the web servers operated by Red Five. In that regard, Plaintiff relied on cases like Hill v. Amazon. com, 2006 WL 151911 (E.D.Tex.2006), which base liability for the actions of one party on a another party according to the connection and dealings between the two. Not once in its briefs or at oral argument did Plaintiff cite NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed.Cir.2005), to argue that Mace'rich could use the accused Apache and Tomcat software without actually controlling it. The basis for this argument is entirely new.

Likewise, this is the first time that Plaintiff has alleged that Macerich induces visitors to its web sites to use the accused Apache and Tomcat software. In the briefing before the Magistrate Judge, Plaintiff discussed Red Five's use of the software in providing web hosting to Macerich as the only alleged direct infringement underlying its allegations of inducement. In its objections, Plaintiff has changed its position to argue that its claims of inducement are supported by a different type of infringing use. Again, this is an entirely new argument, and it is unsupported by the law.

The Fifth Circuit has held that issues raised for the first time in objections to a Report and Recommendation of a magistrate judge are not properly before the district judge. United States v. Annstrong, 951 F.2d 626, 630 (5th Cir.1992); see also Finley v. Johnson, 243 F.3d 215, 219 n. 3 (5th Cir.2001). Thus, the Court is under no obligation to address the arguments raised for the first time in Plaintiffs objections. Even if the Court were under an obligation to address the new arguments, the Court would find Plaintiff's objections without merit for the following reasons.

Contrary to Plaintiffs first objection, the Report and Recommendation did address the issue of Macerich's "use" of the accused combination of Apache and Tomcat software. The Magistrate Judge specifically found that "Macerich does not take part in or control the operation of the Accused Systems. Instead, the Accused Systems are owned, operated, managed, and controlled by Red Five...." Report and Recommendation at pgs. 629-30. "Operation" is clearly the "use" that is implicated when dealing with patents directed to "a method and apparatus for managing dynamic web page generation requests" and accusations directed to web server computers and software.

The Magistrate Judge found that Macerich did not take part in operating the accused software, or in selecting it, or in configuring it and putting it to use. Report and Recommendation at pgs. 629-30. Instead, Red Five, and not Macerich, used the accused software in the course of its business as a web hosting provider. Id. at pg. 630, Having drawn that conclusion, the Report and Recommendation analyzes whether Macerich controlled Red Five's actions so as to be liable for them, and it correctly concludes that Macerich did not. Id. at pgs. 633-34.

Macerich does not use the accused Apache and Tomcat software because it is not responsible for running that software to manage incoming requests to a web server. The patents in suit "claim[] a method and apparatus for managing...