SB IP Holdings LLC v. Vivint, Inc.
| Court | United States District Courts. 5th Circuit. United States District Court of Eastern District Texas |
| Parties | SB IP HOLDINGS LLC, Plaintiff, v. VIVINT, INC., Defendant. |
| Docket Number | Civil Action 4:20-CV-00886 |
| Decision Date | 14 November 2022 |
SB IP HOLDINGS LLC, Plaintiff,
v.
VIVINT, INC., Defendant.
Civil Action No. 4:20-CV-00886
United States District Court, E.D. Texas, Sherman Division
November 14, 2022
MEMORANDUM OPINION AND ORDER
AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE
Pending before the Court is Non-Party Eyetalk 365's Motion for Protective Order (Dkt. #160). Having considered the motion, the response, and the relevant pleadings, the Court finds the motion should be DENIED.
BACKGROUND
Plaintiff SB IP Holdings LLC (“SB IP”) accuses Vivint, Inc. (“Vivint”) of infringing U.S. Patent Nos. 9,432,638 (the “'638 Patent”); 9,485,478 (the “'478 Patent”); 9,516,284 (the “'284 Patent”); 9,635,323 (the “'323 Patent”); 9,648,290 (the “'290 Patent”); 9,414,030 (the “'030 Patent); and 10,674,120 (the “'120 Patent”) (collectively, the “Patents-in-Suit”). Each of the Patents-in-Suit pertain to communication and video monitoring technology.
In response, Vivint asserts, among others, a defense of inequitable conduct (Dkt. #164 at p. 12). The heart of Vivint's inequitable conduct defense is its contention that SB IP misled the United States Patent and Trademark Office (“USPTO”) on several occasions regarding the pendency of patent application 14/338,525 (the “'525 Application”). Specifically, Vivint alleges that Eyetalk 365 (“Eyetalk”)-and later SB IP-misrepresented to the USPTO that the '525 Application was pending when, in fact, Eyetalk abandoned the '525 Application in October 2014.
Vivint contends that SB IP's misrepresentations regarding the '525 Application are critical to this case because the Patents-in-Suit rely upon the '525 Application to maintain their priority date. Indeed, as the Court has previously noted, the '525 Application is vital to each of the Patents-in-Suit: without a pending ‘525 Application, the priority chain of the Patents-in-Suit is defective.
I. Factual Background
A. The '525 Application
Each of the Patents-in-Suit belongs to a patent family that names Ronald Carter as the sole inventor (the “Cater Patent Family”). Revolutionary Concepts, Inc. (“REVO”)-the previous license holder of the Carter Patent Family-utilized Tillman Wright, LLC (“Tillman”) as its patent prosecution counsel during the relevant time period. As counsel to REVO, Tillman became familiar with the Carter Patent Family, which includes the '525 Application.
On February 10, 2014, REVO granted Eyetalk an exclusive license to the Carter Patent Family, which carried with it the right to prosecute the portfolio (Dkt. #160). Five months after Eyetalk acquired the Carter Patent Family, Tillman filed the '525 Application (Dkt. #167, Exhibit 3 at p. 7). Tillman did so without paying the required application fees or providing the USPTO with required documents, including an inventor's oath. In August 2014, the USPTO sent Tillman a Notice to File Missing Parts (the “2014 Notice”) that set a two-month deadline to remedy the deficiencies in the '525 Application. Neither Tillman nor Eyetalk ever filed a timely response to the 2014 Notice or paid any of the required fees. Consequently, Eyetalk abandoned the '525 Application on October 7, 2014 (Dkt. #167, Exhibit 3 at p. 16).
In March 2015, Eyetalk retained Braxton Perrone, PLLC (“Braxton”) as its new patent prosecution counsel. On March 26, 2015, Eyetalk filed patent application number 14/670,044 (the “'044 Application”), which claims priority through the '525 Application (Dkt. #167,
Exhibit 2 ¶ 11). In filing the '044 Application, Eyetalk represented to the USPTO that the '525 Application was co-pending. Eyetalk contends that it first learned that the '525 Application was abandoned when it received a notice of abandonment from the USPTO on April 7, 2015-after the filing of the '044 Application.
To be clear, it is undisputed that the '525 Application is an indispensable link in the priority chain of the Patents-in-Suit. Each of the Patents-in-Suit claim priority through the '044 Application, which, in turn, relies on the '525 Application for its priority date.
B. SB IP's Licensing History
Beginning in 2017, Eyetalk asserted the Carter Patents in infringement actions and encountered invalidity challenges based on the abandonment of the '525 Application. See, e.g., Eyetalk365, LLC v. Zmodo Technology Corp. Ltd., No. 3:16-cv-00789 (W.D. N.C. Nov. 14, 2016) (Dkt. #19; Dkt. #21).[1]In one of those infringement actions, Eyetalk sued SkyBell Technologies, Inc. (“SkyBell”), SB IP's parent company, for infringing several of the Carter Patents, all of which claim priority through the '525 Application. Eyetalk365, LLC v. SkyBell Techs., Inc., No. 3:16-cv-00702 (W.D. N.C. Oct. 3, 2016) (Dkt. #1). SkyBell responded by arguing that the asserted patents were invalid because the '525 Application had been abandoned. SkyBell eventually settled the dispute with Eyetalk by purchasing the right to license and/or own the Carter Patent Family (Dkt. #160 at p. 1). The agreement between SkyBell and Eyetalk provided SB IP with the rights to enforce and license the Carter Patent Family, but it also required the “cooperation of Eyetalk” and mandated that SkyBell pay Eyetalk an “operations fee” (Dkt. #160 at p. 5).
C. The ITC Investigation
In December 2020, Eyetalk, SB IP, and SkyBell brought an action before the International Trade Commission (the “ITC”), asserting that Vivint was infringing the Carter Patent Family (Dkt. #167, Exhibit 3). The ITC issued its Initial Determination on September 15, 2021, in which it concluded that the asserted patents were invalid because Eyetalk abandoned the '525 Application “no later than midnight on October 6, 2014” (Dkt. #167, Exhibit 3 at p. 16). Because it determined that the priority chain was broken, the ITC held that each of the patents asserted in the investigation-including three of the six Patents-in-Suit[2]-was anticipated by U.S. Patent No. 8,164,614 (“the “'614 Patent”), which “disclose[d] every limitation of every claim asserted in the investigation” (Dkt. #167, Exhibit 3 at p. 19).
D. Petitions for Revival
On November 24, 2021, aware of the defects in the Carter Patent Family priority chain, SB IP petitioned the USPTO to revive the '525 Application (Dkt. #167, Exhibit 1). USPTO rules required SB IP to submit facts sufficient to establish that the “delay in reply by applicant or patent owner was unintentional ....” 37 C.F.R. § 1.137(a). To satisfy this requirement, SB IP represented to the USPTO that Eyetalk's delay was relevant to the petition and stated that Eyetalk's failure to complete the prosecution of the '525 Application was the result of an unintentional delay. In so doing, SB IP relied heavily on a declaration submitted by Ross Helfer, Eyetalk's managing member,[3]in which Mr. Helfer repeatedly stated that Eyetalk relied on the advice of counsel in making decisions with respect to the '525 Application and the prosecution of the Carter Patent Family (Dkt. #167, Exhibit 2 ¶¶ 10-11).
Specifically, Mr. Helfer declared:
• “I was informed by counsel that the '525 Application would not go abandoned until April 6, 2015” (Dkt. #167, Exhibit 2 ¶ 10).
• “After consulting with counsel, Eyetalk determined the best path forward was to file a continuation of the '525 Application. On March 26, 2015, Eyetalk filed [the '044 Application] as a Track One application, believing that this continuation was appropriate because the '525 Application was still pending. Eyetalk never received any indication from the USPTO that the '525 Application was abandoned until the April 7, 2015, Notice of Abandonment, after the '044 Application was filed” (Dkt. #167, Exhibit 2 ¶ 11).
• “Each time an [allegation regarding the abandonment of the '525 Application] is made, Eyetalk, and subsequently SBIP, have reviewed the specific allegations in coordination with counsel and concluded that the '525 Application was not abandoned until April 6, 2015, at the earliest. Eyetalk maintains this belief and continues to view these allegations as a litigation tactic that lacks merit” (Dkt. #167, Exhibit 2 ¶ 14).
On March 4, 2022, the USPTO dismissed SB IP's petition for revival, explaining that Eyetalk had abandoned the '525 Application as of October 7, 2014 by failing to respond to the 2014 Notice (Dkt. #167, Exhibit 4) (the “Initial Determination”). In the Initial Determination, the USPTO noted three periods of delay: (1) the delay in filing a reply that originally resulted in the abandonment of the '525 Application; (2) the seven-year delay in filing the petition to revive the '525 Application; and (3) the delay in filing a grantable petition. The USPTO concluded that SB IP's petition had established that the second period of delay was unintentional but directed SB IP to file a renewed petition addressing the first and third periods.
SB IP filed its renewed petition on May 3, 2022, asserting again that Eyetalk relied on the advice of counsel in its decisions and assumptions regarding the '525 Application and the Carter Patent Family (Dkt. #167, Exhibit 5). With respect to the first period of delay, SB IP repeated its claim that it relied on the assertions from Eyetalk-which, in turn, relied on its counsel-in making decisions regarding the Carter Patent Family. Ultimately, SB IP represented to the USPTO that
“Eyetalk had the '044 Application filed on the advice of counsel and was informed by counsel that the '525 Application was still pending at the time '044 Application was filed, thus maintaining the priority chain, and would remain pending until April 6, 2015” (Dkt. #167, Exhibit 5 at p. 5).
In support of its renewed petition, SB IP filed an additional declaration from Mr. Helfer, in which he again stated that Eyetalk “relied heavily” on counsel in making decisions related to the '525 Application (Dkt. #167, Exhibit 6 ¶ 14). In particular, Mr. Helfer declared:
• “Form [sic] the time Eyetalk obtained...
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