Superguide Corp. v. Directv Enterprises, Inc., CIV. 100CV144.

• Decision Date: 25 October 2001
• Docket Number: No. CIV. 100CV144.,CIV. 100CV144.
• Citation: 169 F.Supp.2d 492
• Court: U.S. District Court — Western District of North Carolina
• Parties: SUPERGUIDE CORPORATION, a North Carolina Corporation, Plaintiff, v. DIRECTV ENTERPRISES, INC., a Delaware Corporation; DirecTV, Inc., a California Corporation; DirecTV Operations, Inc., a California Corporation; Hughes Electronics Corporation, a Delaware Corporation; Thomson Consumer Electronics, Inc., a Delaware Corporation; Echostar Communications Corporation, a Nevada Corporation; Echostar Satellite Corporation; a Colorado Corporation; and Echostar Technologies Corporation, a Texas Corporation, Defendants/Third Party Plaintiffs, v. Gemstar Development Corporation, Third-Party Defendant.

169 F.Supp.2d 492

SUPERGUIDE CORPORATION, a North Carolina Corporation, Plaintiff, v. DIRECTV ENTERPRISES, INC., a Delaware Corporation; DirecTV, Inc., a California Corporation; DirecTV Operations, Inc., a California Corporation; Hughes Electronics Corporation, a Delaware Corporation; Thomson Consumer Electronics, Inc., a Delaware Corporation; Echostar Communications Corporation, a Nevada Corporation; Echostar Satellite Corporation; a Colorado Corporation; and Echostar Technologies Corporation, a Texas Corporation, Defendants/Third Party Plaintiffs, v. Gemstar Development Corporation, Third-Party Defendant.

No. CIV. 100CV144.

United States District Court, W.D. North Carolina. Asheville Division.

October 25, 2001.

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A. Ward McKeithen, Everett J. Bowman, Robinson, Bradshaw & Hinson, P.A., Charlotte, NC, John J. Barnhardt, III, Richard M. McDermott, Alston & Bird, LLP, Charlotte, NC, Lawrence M. Hadley, Sean M. Kneafsey, Hennigan, Bennett & Dorman, Los Angeles, CA, for North Carolina Corp.

Michael E. Ray, Charles A Burke, Womble, Carlyle, Sandridge & Rice, Winston-Salem, NC, Darryl E. Towell, Jones Day Reavis & Pogue, Irvine, CA, Michael J. Newton, Jone Day Reavis & Pogue, Dallas, TX, Victor G. Savikas, Jones Day Reavis & Pogue, Los Angeles, CA, Michael J. Newton, Kevin G. McBride, Jones, Day, Reavis & Pogue, Los Angeles, CA, for DirecTV Enterpises, Inc., DirecTV, Inc., DirecTV Operations, Inc., Hughes Electronics Corp.

Wyatt S. Stevens, Roberts & Stevens, P.A., Asheville, NC, Harold J. McElhinny, Paul J. Riley, Morrison & Foerster LLP, San Francisco, CA, John P. Corrado, Charles C. Carson, Morrison & Foerster LLP, McLean, VA, Mark Danis, Anders T. Aannestad, Morrison & Foerster, LLP, San Diego, CA, for Thomson Consumer Electronics, Inc.

Larry McDevitt, Van Winkle, Buck, Wall, Starnes & Davis, P.A., Asheville, NC, Lawrence K. Nodine, Nagendra Setty, Mitchell G. Weatherly, William F. Long, Needle & Rosenberg, P.C., Atlanta, GA, J. Donald Cowan, Jr., Greensboro, NC, Echostar Communications Corp., Echostar Satellite Corp, Echostar Technologies Corp.

MEMORANDUM OF DECISION

THORNBURG, District Judge.

THIS MATTER is before the Court on the parties' motions for the construction of certain claim language used in U.S. Patent No. 4,751,578 to Reiter, et al. (Reiter '578), U.S. Patent No. 5,038,211 to Hallenbeck (Hallenbeck '211) and U.S. Patent No. 5,293,357 to Hallenbeck (Hallenbeck '357).¹

I. PROCEDURAL HISTORY

In June 2000, SuperGuide Corporation (SuperGuide) brought this action seeking declaratory and injunctive relief against the Defendants for the alleged infringement of the above patents. Each Defendant answered and asserted counterclaims for a declaration of noninfringement and invalidity. In April 2001, Defendants DirecTV Enterprises, Inc., DirecTV, Inc., DirecTV Operations, Inc. (DirecTV) and Hughes Electronics Corporation (Hughes) obtained permission to implead Gemstar Development Corporation (Gemstar). In the third-party complaint, DirecTV and Hughes also sought a declaration of noninfringement and invalidity as well as a declaration of ownership of the patents. Gemstar asserted crossclaims against SuperGuide for breach of contract and declaratory relief.² SuperGuide counterclaimed against Gemstar for a declaration of the field of use reserved in the license agreement between the two. EchoStar then asserted as an affirmative defense the issue of patent misuse by Gemstar.

By Memorandum and Decision issued May 7, 2001, the undersigned disqualified SuperGuide's lead counsel, Roderick Dorman, from continued representation due to his past representation of Gemstar. SuperGuide petitioned the Federal Circuit Court of Appeals for a writ of mandamus to compel the undersigned to vacate that ruling. While that petition was pending, the undersigned conducted a two-day hearing pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). On August 13, 2001, the Federal Circuit denied SuperGuide's petition.

While this ruling was under advisement, EchoStar moved the United States District Court for the Northern District of Georgia to transfer this action for consolidation with In re Gemstar Development Corporation Patent Litigation, Multidistrict Litigation Case No. 1274, which involves issues of antitrust violations. The motion was based on EchoStar's affirmative defense of patent misuse asserted against Gemstar in this action. By Order entered September 6, 2001, the undersigned severed that claim from this action. The Multidistrict Litigation Panel has not yet determined whether to transfer the severed action.

Having heard oral argument and considered the numerous filings of the parties, this matter is ripe for disposition.

II. FACTUAL BACKGROUND

The patents at issue, which are owned by SuperGuide, involve interactive television programming guides. Each of the Defendants manufactures, sells or distributes such guides, which SuperGuide claims infringe its patents. GemStar is the licensee of SuperGuide's patents and has aggressively marketed them.³

An interactive programming guide allows a television viewer to select specific programs for viewing or recording.⁴ In its earliest and most simplistic form, the guide was nothing more than a listing of programs scheduled for broadcast during a particular time frame which scrolled across the television screen. The viewer selected a program by turning to the channel shown for that program or by clicking on the program with a remote control device. The patents at issue describe later inventions with more sophisticated programming, including the selection of programs due to air at future times and the recording thereof. In order to understand how these inventions work, an understanding of basic television technology is necessary.

A television signal is an electrical signal that is created when a video camera captures an image. When a television signal is broadcast, a television receiver picks up and decodes the signal so as to produce pictures on the television screen. A television signal is made up of a series of frames, or still pictures, each one containing an image that varies slightly from the image in the preceding frame. When the frames are displayed by a television in rapid sequence, they create the appearance of smooth, uninterrupted motion to the human eye. A standard American television displays 30 frames per second.

Each frame is made up of 525 horizontal lines. Each set of alternating lines forms two fields: odd and even. A television produces pictures on the screen by using an electronic beam to scan the horizontal lines of a frame across the inside surface of the screen from left to right and top to bottom. To eliminate flicker, the beam first scans the lines that constitute the odd field, and then scans the lines that constitute the even field. A standard American television displays 60 fields per second.

Ampex Corp. v. Mitsubishi Elec. Corp., 966 F.Supp. 263, 265 (D.Del.1997). In other words, the beam moves from left to right and then from top to bottom scanning the surface of the screen 60 times per second and illuminating phosphors on the inside surface of the television screen. Each illuminated spot is called a pixel, which is an acronym for a picture element.⁵ Because it takes some time for the beam to move from its horizontal pattern to the vertical pattern, the beam is turned off during the time it changes position in order to avoid interference with the picture. These times are called blanking intervals, which also are used to transmit certain data not here relevant. Sync pulses are used to synchronize the system.

[Images] may be recorded using either analog or digital signals. In an analog recording, [images are] converted into an electrical signal by a device such as a [television camera]. The [camera] generates an electrical signal that varies in proportion to changes in [brightness]. The voltage signal is an analogous replica of the [image] source, thus the name "analog" [signal]. A digital [mechanism] converts the same [image] source into a series of binary numbers, 1s and 0s. This digital signal represents the [image] source. A digital signal is not continuous. Rather, it represents a "sampling" of the [image] source at regular, closely spaced intervals. Each sample is analogous to a digital snapshot of the [image] at a particular point in time. If the sampling is done frequently enough, the digital signal can accurately represent the [image] source.

Crystal Semiconductor v. TriTech Micro-electronics Int'l, Inc., 246 F.3d 1336, 1343 (Fed.Cir.2001). Thus, an analog signal has its variables represented by continuously measured voltages of other quantities, such as the television picture. The scanned voltages together with the blanking intervals and sync pulses constitute an analog signal called a baseband video signal which cannot be transmitted for any significant distance. Therefore, the baseband video signal is superimposed, or modulated, onto a carrier wave. When that wave is ultimately received in the television, it must be demodulated back to the baseband video signal in order for the television to show the program.

In the early 1990's, technology was developed which allowed the transmission of a digital television signal, a signal in which, as noted above, numbers are expressed as digits based on the binary system. Unlike an analog signal, a digital signal does not transmit a baseband video signal. Instead, it converts the brightness levels in the scanned beam into a digital bit stream which, like an analog signal, also must be transmitted over a carrier wave.

The parties agree that in 1985, the filing date of the Reiter '578 patent, television signals were transmitted from a terrestrial broadcast antenna via analog signals modulated onto a carrier wave. These televisions were capable of receiving only analog signals via carrier...