Simo Holdings Inc. v. Hong Kong Ucloudlink Network Tech. Ltd., 18-cv-5427 (JSR)

• Decision Date: 25 April 2019
• Docket Number: 18-cv-5427 (JSR)
• Citation: 376 F.Supp.3d 369
• Parties: SIMO HOLDINGS INC., Plaintiff, v. HONG KONG UCLOUDLINK NETWORK TECHNOLOGY LIMITED and uCloudlink (America), Ltd., Defendants.
• Court: U.S. District Court — Southern District of New York

376 F.Supp.3d 369

SIMO HOLDINGS INC., Plaintiff,

v.HONG KONG UCLOUDLINK NETWORK TECHNOLOGY LIMITED and uCloudlink (America), Ltd., Defendants.

18-cv-5427 (JSR)

United States District Court, S.D. New York.

Signed April 25, 2019

Harold Henry Davis, Kenneth Jenq, Lei Howard Chen, Peter E. Soskin, Rachel Elizabeth Burnim, K&L Gates LLP, San Francisco, CA, Gina Alyse Jenero, K&L Gates LLP, Chicago, IL, Jeffrey Charles Johnson, K&L Gates LLP, Seattle, WA, Min Wu, Yang Liu, K&L Gates LLP, Palo Alto, CA, Matthew Jason Weldon, K&L Gates LLP, New York, NY, for Plaintiff.

Robert William Busby, Jr., Bradford A. Cangro, Ghee Lee, Morgan, Lewis & Bockius LLP, Washington, DC, Shaobin Zhu, Morgan, Lewis & Bockius LLP, Palo Alto, CA, Jason C. White, Karon Nicole Fowler, Nicholas Restauri, Michael Edward Tracht, Morgan, Lewis & Bockius LLP, Chicago, IL, for Defendants.

OPINION

JED S. RAKOFF, U.S.D.J.

In this patent infringement action, plaintiff SIMO Holdings Inc. ("SIMO" or "plaintiff") and defendants Hong Kong uCloudlink Network Technology Limited and uCloudlink (America), Ltd. (collectively, "uCloudlink" or "defendants") cross-moved for summary judgment. In a "bottom-line" Order, the Court previously granted plaintiff's motion and granted in part and denied in part defendants' motion. See Order dated April 12, 2019, ECF No. 131. This Opinion explains why.

I. Factual Background ¹

A. The Accused Products

uCloudlink sells the "GlocalMe" G2, G3, and U2 Series WiFi hotspot devices, as well as the S1 mobile phone, in the United States (collectively, the "Accused Products" or "Accused Devices"). Pl. SOMF² ¶¶ 7-13, ECF No. 113; Def. Resp. SOMF ¶¶ 7-13, ECF No. 123; Def. SOMF ¶ 1, ECF No. 120; Pl. Resp. SOMF ¶ 1, ECF No. 117.³ There is no material dispute about the operation of these Devices. Each of the Accused Products "offers international data roaming services." Def. Mem. 2, ECF No. 119. In other words, the Accused Products enable users to access data services while traveling abroad without incurring roaming fees. Each of the Products can act as "Wi-Fi hotspot[s]," meaning they provide data to other devices. Pl. SOMF ¶¶ 120-21; Def. Resp. SOMF ¶¶ 120-21.

The Accused Products all work similarly. Each of the Devices includes a SIM card, referred to as a "seed" SIM. The GlocalMe hotspot devices are shipped with physical seed SIM cards, while the S1 phone uses a virtual (or "soft") seed SIM. Pl. SOMF ¶¶ 47-49, 61; Def. Resp. SOMF ¶¶ 47-49, 61.⁴ None of the seed SIMs are associated with cellular carriers operating in the United States. Def. SOMF ¶¶ 13-14; Pl. Resp. SOMF ¶¶ 13-14. The seed SIMs allow the Devices to establish a connection to uCloudlink's servers using a base station of a local cellular network. Def. SOMF ¶ 16; Pl. Resp. SOMF ¶ 16.

Once connected to the uCloudlink servers, the Device sends its International Mobile Equipment Identity (or "IMEI"), which the server receives and caches. Pl. SOMF ¶¶ 73-75, 83; Def. Resp. SOMF ¶¶ 73-75, 83; Pl. Reply SOMF ¶¶ 73-75, 83, ECF No. 115. uCloudlink's servers then verify whether the Device is registered based on the IMEI. Pl. SOMF ¶¶ 76, 82-83; Def. Resp. SOMF ¶¶ 76, 82-83.⁵ S1 Devices, as well as non-rental, non-contract versions of the G2, G3, and U2 Devices, also transmit a user ID and password to the uCloudlink servers. Pl. SOMF ¶¶ 77-80, 82-83; Def. Resp. SOMF ¶¶ 77-80, 82-83; Pl. Reply SOMF ¶¶ 77-80, 82-83. The user ID and password are used to verify whether the account has sufficient funds to access the data service. Pl. SOMF ¶¶ 80, 83, 88; Def. Resp. SOMF ¶¶ 80, 83, 88.

If the Device is verified, the servers then dispatch a virtual SIM, known as a "Cloud SIM," to the Device based on the Device's location and signal strength. Pl. SOMF ¶¶ 89, 94; Def. Resp. SOMF ¶¶ 89, 94. The Cloud SIM is subscribed to a local cellular network based on the location of the Device. Pl. SOMF ¶ 94; Def. Resp. SOMF ¶ 94.⁶ The Cloud SIM is drawn from uCloudlink's bank of SIM image files, which includes SIM cards subscribed to various cellular carriers located in the United States (such as AT&T and Verizon). Pl. SOMF ¶¶ 90, 94, 105; Def. Resp. SOMF ¶¶ 90, 94, 105; Pl. SOMF Exh. J ¶¶ 64, 71, 74, 80 ("Feuerstein Rebuttal Report"), ECF No. 114-3.⁷

After receiving the Cloud SIM, the Device uses the International Mobile Subscriber Identity (or "IMSI") of the Cloud SIM to register with a base station of a local cellular network. Pl. SOMF ¶¶ 97, 102; Def. Resp. SOMF ¶¶ 97, 102; Feuerstein Rebuttal Report ¶ 38. The base station responds with an authentication request, which includes generating a random number (or "RAND"). Pl. SOMF ¶ 97, 102; Def. Resp. SOMF ¶¶ 97, 102; Feuerstein Rebuttal Report ¶ 38. The Device then packages the RAND with other information to generate an APDU authentication request, which it transmits to the uCloudlink servers. Pl. SOMF ¶¶ 98, 103, 109, 112; Def. Resp. SOMF ¶¶ 98, 103, 109, 112. The servers pass the APDU authentication request, along with the cached IMSI of the Cloud SIM, to the SIM bank, where the physical SIM card associated with that IMSI generates an authentication result. Pl. SOMF ¶ 110, 113; Def. Resp. SOMF ¶¶ 110, 113. That authentication result is sent back to the Device using a local cellular network. Pl. SOMF ¶¶ 111, 114; Def. Resp. SOMF ¶¶ 111, 114. The Device then unpacks the authentication result, retrieves the necessary information, and sends it along to the base station to answer the original authentication request. Pl. SOMF ¶¶ 115, 117; Def. Resp. SOMF ¶¶ 115, 117. The Cloud SIM is then authenticated and the Device can access the local cellular network as a local subscriber. Pl. SOMF ¶¶ 116, 118; Def. Resp. SOMF ¶¶ 115, 118. The end result of this process is that a user traveling abroad can access the cellular network as a local user would, without incurring roaming fees.

B. The Asserted Patents

SIMO owns U.S. Patents Nos. 8,116,735 ("the '735 Patent") and 9,736,689 ("the '689 Patent"). The '689 Patent is a continuation of the '735 Patent, which was filed February 28, 2008, and the title of each is "System and Method for Mobile Telephone Roaming." Pl. SOMF Exh. A ( '689 Patent), ECF No. 86-1; Compl. Exh. A ( '735 Patent), ECF No. 1-1. The patents recite that their purpose is to allow users to access mobile networks while traveling abroad without incurring costly roaming fees or engaging in the cumbersome processing of switching physical SIM cards. E.g., '689 Patent at 2:38-62. SIMO has authorized another company, Skyroam, Inc., to practice the '689 Patent, and Skyroam sells at least two products that purportedly practice the '689 Patent in the United States. Def. SOMF ¶¶ 51-56; Pl. Resp. SOMF ¶¶ 51-56. Neither of those products are marked with the patent number. Def. SOMF ¶¶ 57-58; Pl. Resp. SOMF ¶¶ 57-58.

On June 15, 2018, SIMO filed this lawsuit. Def. SOMF ¶ 65; Pl. Resp. SOMF ¶ 65. The original complaint asserted infringement of claims 1, 8, and 13 of the '735 Patent by uCloudlink's GlocalMe G2, G3, and U2 Devices. See Compl. ¶¶ 1, 16. Prior to that filing, SIMO never communicated with uCloudlink regarding the '689 Patent. Def. SOMF ¶ 65; Pl. Resp. SOMF ¶ 65.

On August 13, 2018, counsel for SIMO sent a letter to counsel for uCloudlink. Def. SOMF ¶ 69; Pl. Resp. SOMF ¶ 69. That letter alleged that uCloudlink's "GlocalMe services and devices" "infringe one or more claims of the '689 Patent, including at least claims 1, 5–8, 10–14, 19, and 20." Cangro Exh. Q at 1, ECF No. 89-17. The letter also linked to, and quoted language from, uCloudlink's Kickstarter page for the GlocalMe G2. Id. On August 20, 2018, SIMO amended its complaint to add infringement allegations as to the '689 Patent. See First Am. Compl. ¶¶ 1, 41, ECF No. 20. The Amended Complaint also added allegations regarding the S1 phone. Id.

On January 15, 2019, the Court approved the parties' stipulation to dismiss the count alleging infringement of the '735 Patent. See Stipulation, ECF No. 71. Infringement of the '689 Patent is thus the only remaining claim.⁸

C. The Instant Motions

Each party has cross-moved for summary judgment. SIMO seeks (1) summary judgment that the Accused Products infringe claims 8 and 11 of the '689 Patent and (2) partial summary judgment that the "Kasper Reference" does not constitute prior art. Pl. Mem. 1, ECF No. 112. Defendants seek (1) summary judgment of non-infringement as to all asserted claims and (2) summary judgment that SIMO is not entitled to pre-suit damages. Def. Mem. I.⁹

II. Standard for Summary Judgment

A party is entitled to summary judgment on a claim or issue "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record ... or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1). The movant "always bears the initial responsibility" of "demonstrat[ing] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In response, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (quoting First Nat'l Bank of Ariz. v. Cities Service Co., 391 U.S. 253, 288, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ) ). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. 2505.

III. Direct Infringement

SIMO seeks summary judgment of direct infringement by the Accused Products as to claims 8 and 11 of the '689 Patent. Pl. Mem. 1. uCloudlink seeks summary judgment of...