PrinterOn Inc. v. BreezyPrint Corp.

Citation93 F.Supp.3d 658
Decision Date19 March 2015
Docket NumberCivil Action No. H–13–3025.
PartiesPRINTERON INC., Plaintiff, v. BREEZYPRINT CORP., et al, Defendants.
CourtU.S. District Court — Southern District of Texas

Paul Robert Juhasz, The Juhasz Law Firm PC, Jonathan M. Pierce, Jonna Noel Summers, Ray Thomas Torgerson, Porter Hedges LLP, Houston, TX, for Plaintiff.

Alan G. Laquer, Douglas G. Muehlhauser, Knobbe Martens Olson Bear LLP, Irvine, CA, Charles John Rogers, Conley Rose, P.C., Houston, TX, for Defendants.

MEMORANDUM AND OPINION ON CLAIM CONSTRUCTION AND ON SUMMARY JUDGMENT, SANCTIONS, AND RELATED MOTIONS

LEE H. ROSENTHAL, District Judge.

This patent infringement case involves computer technology for printing on remote devices. Computer users in the 1990s and early 2000s had to download and install drivers before performing most tasks, including printing. In 2000, PrinterOn obtained two patents for automating the driver-download process for network printing and two patents for controlling user access to servers and printers. Although computer users still need devices with drivers under PrinterOn's patents, the drivers need not be manually downloaded and installed. Progress for the users, and benefits for PrinterOn, whose monopoly made it the leading enterprise-grade printing software company in the world.

Progress has continued. A small company in Northern California called BreezyPrint has introduced and marketed a printing system that does not require installing or downloading drivers on end-user devices, whether manually or automatically, to translate data to printer-friendly formats. Instead, BreezyPrint's system moves the data-translation process to the cloud. BreezyPrint's system also allows users to preauthorize the use of a printer in the user's network.

BreezyPrint's new system has gained market share. Uniguest, a company that provides print, technology, and other specialized services for the hospitality industry, entered into a contract with BreezyPrint under which BreezyPrint would supply Uniguest's printing needs. BreezyPrint has become a kind of early Apple to PrinterOn's Microsoft, a new Google to PrinterOn's AskJeeves. PrinterOn sued both BreezyPrint and Uniguest for infringement, seeking damages and an injunction. After PrinterOn settled with Uniguest, and Uniguest ended its BreezyPrint contract, BreezyPrint counterclaimed against PrinterOn for tortiously interfering with the Uniguest contract.

The parties have presented competing claim constructions and asked the court to resolve the disputed terms. BreezyPrint has moved for summary judgment that it does not infringe any of PrinterOn's patents, a declaratory judgment that PrinterOn's patents are invalid, and sanctions against PrinterOn's attorneys for failing to adequately investigate before filing this suit and for making frivolous arguments about the scope of its patents. PrinterOn has cross-moved for summary judgment that BreezyPrint's tortious-interference counterclaim and unclean-hands defense both fail as a matter of law.

Based on the pleadings, the motions, the briefs, the record, the hearings, the arguments of counsel, and the applicable law, the court:

1. construes the disputed claim terms;
2. grants BreezyPrint's motions for summary judgment of noninfringement, (Docket Entry Nos. 32, 37);
3. grants PrinterOn's motion for summary judgment dismissing BreezyPrint's tortious-interference counterclaim, (Docket Entry No. 103);
4. denies BreezyPrint's motion for sanctions, (Docket Entry No. 152);
5. denies PrinterOn's motion for leave to file a surresponse, (Docket Entry No. 185); and
6. denies as moot BreezyPrint's motion for summary judgment for invalidity, (Docket Entry No. 109), PrinterOn's motion for summary judgment on BreezyPrint's unclean-hands defense, (Docket Entry No. 99), and BreezyPrint's motion to defer a decision on that motion, (Docket Entry No. 101).

By March 27, 2015, the parties must either: (a) file a statement identifying any issues that remain to be resolved and a proposed schedule for doing so; or (b) submit a proposed form of final judgment.

The reasons for these rulings are explained below.

I. Background

Both PrinterOn and BreezyPrint design and sell mobile-printing services to print files from such devices as smartphones and tablets. PrinterOn, a Canadian company, holds several patents dating back to the late 1990s. PrinterOn uses cloud technology to enable users to print documents sent from a smartphone, tablet, or other computing device to a PrinterOn-enabled printer where it is located. PrinterOn's technology has been used in over 10,000 printing locations in more than 120 countries.

PrinterOn's patents teach a system and method for a “network terminal” (such as an iPhone or iPad) to use “resource driver” software to translate the data the user wants to print into a printer-friendly format, and then to communicate that translated data to a “network resource device,” such as a printer or fax machine. Under PrinterOn's system, the printing cannot occur unless the printer receives a recognized authorization password.

BreezyPrint, a mobile-printing start-up in the Bay Area, uses a similar system with differences. In May 2009, the founder of what became BreezyPrint, Jared Hansen, had an idea for improving mobile printing. He outlined the idea—quaintly enough, using a pen and paper—and listed four advantages. One advantage was the absence of the “need for any printer driver on [the] handheld device.” (Docket Entry No. 32, Hansen Decl., Ex. 1 (emphasis original)). As a result, the “software for [the] device can be very lightweight.” (Id. ). Hansen founded BreezyPrint a few months later. (Id. ¶ 4).

BreezyPrint's system does not require drivers or authorization passwords at the user level. Instead, BreezyPrint allows users to send untranslated data from their mobile devices, such as an iPhone or tablet, through its own cloud server, the “Breezy Cloud.” The Breezy Cloud translates the user's data into printer-friendly format. The Breezy Cloud then sends the printable material across a firewall to another server, the “Breezy Connector,” which transmits the material to printers that have been preauthorized for the user.

Uniguest provides streamlined technological solutions for the hospitality industry. When this lawsuit was filed, the company had “more systems deployed and five-star relationships with every major hospitality brand than any other provider in the industry.” (Docket Entry No. 120, at 2). Uniguest has more than 14,000 placements “for more than 8,000 clients covering 40 countries.” (Id. ). Uniguest expected its systems to be used by “every Hilton brand and property by 2015,” which would cover “nearly 50% of the highly sought after full-service segment of the U.S. hospitality industry.” (Id. ).

In November 2012, after discussions about selling a jointly developed printing product for the hospitality industry, BreezyPrint signed a contract to develop a printing product for Uniguest. (Docket Entry No. 120, at 3). Under the contract, BreezyPrint would provide its mobile-printing services to more than 8,000 Uniguest customer sites in exchange for licensing revenue. Uniguest began promoting BreezyPrint over PrinterOn with its customer hotels. PrinterOn began to lose its industry dominance. In October 2013, PrinterOn filed this suit.

PrinterOn alleges willful infringement (direct, inducing, and contributing) of four patents, U.S. Patent Nos. 6,990,527 ('527), 7,007,093 ('093), 7,249,188 ('188), and 7,827,293 ('293). (Docket Entry No. 1). The '527 and the '093 Patents —the “Driver Patents”—address PrinterOn's system and method for using drivers to translate data into printer-ready format. The '188 and '293 Patents —the “Password” or “Polling Patents”—cover PrinterOn's system and method for polling queued print jobs outside the firewall and allowing them inside the firewall only if the user has obtained and submits an authorization password.

Before BreezyPrint filed an answer, PrinterOn dismissed its claims against Uniguest, without prejudice. See Fed. R. Civ. P. 41(a)(1)(A)(i) ; (Docket Entry No. 6). BreezyPrint asserted defenses of noninfringement, unclean hands, invalidity, patent exhaustion, laches, and government sale. BreezyPrint also counterclaimed for a declaratory judgment of noninfringement and invalidity, and for damages based on PrinterOn's alleged tortious interference with the Uniguest contract. (Docket Entry Nos. 13, 143).

In June 2014, before the scheduled completion of discovery (but after allowing PrinterOn to review its source code), BreezyPrint moved for summary judgment that it did not infringe any of the four patents. (Docket Entry Nos. 32, 37). The parties submitted competing claim constructions. The court held a two-day claim-construction hearing in November 2014, to consider the parties' disputed constructions under Markman v. Westview Instruments, 52 F.3d 967 (Fed.Cir.1995), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996).

The following motions are pending:

• BreezyPrint's motion for summary judgment that it does not infringe the Driver Patents (Docket Entry No. 32);
• BreezyPrint's motion for summary judgment that it does not infringe the Polling–Password Patents (Docket Entry No. 37);
• PrinterOn's motion for summary judgment on BreezyPrint's unclean-hands affirmative defense (Docket Entry No. 99);
• BreezyPrint's motion to defer response and decision on PrinterOn's motion for summary judgment on BreezyPrint's unclean-hands defense, including BreezyPrint's request to compel production of the G. Tisdall emails (Docket Entry No. 101);
• PrinterOn's motion for summary judgment on BreezyPrint's tortious interference counterclaim (Docket Entry No. 103);
• BreezyPrint's motion for summary judgment that the four patents are invalid (Docket Entry No. 109);
• BreezyPrint's motion for sanctions (Docket Entry No. 152); and
• PrinterOn's motion for leave to file a supplemental response in opposition to BreezyPrint's motion for sanctions (
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