Sycamore Ip Holdings LLC v. At & T Corp.

• Citation: 294 F.Supp.3d 620
• Decision Date: 16 February 2018
• Docket Number: Case No. 2:16–CV–588–WCB
• Parties: SYCAMORE IP HOLDINGS LLC, Plaintiff, v. AT & T CORP., et al., Defendants.
• Court: U.S. District Court — Eastern District of Texas

294 F.Supp.3d 620

SYCAMORE IP HOLDINGS LLC, Plaintiff,

v.AT & T CORP., et al., Defendants.

Case No. 2:16–CV–588–WCB

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

Signed February 16, 2018

Eric Paul Berger, Michael S. DeVincenzo, Timothy J. Rousseau, Mishcon de Reya New York LLP, New York, NY, Abigail Moss Hinchcliff, Pro Hac Vice, Glen Eric Summers, Pro Hac Vice, John M. Hughes, Karma M. Giulianelli, Sean C. Grimsley, Bartlit Beck Herman Palenchar & Scott, LLP—Denver, Denver, CO, Deborah J. Race, Otis W. Carroll, Jr, Ireland Carroll & Kelley, Tyler, TX, Taylor A. R. Meehan, Bartlit Beck Herman Palenchar & Scott LLP—Chicago, Chicago, IL, for Plaintiff.

Brett Christopher Govett, Norton Rose Fulbright US LLP, Dallas, TX, Christopher DeCoro, Jeanne Marie Heffernan, Leslie Marie Schmidt, Sarah Alicia Piazza, Kirkland & Ellis, LLP—NYC, New York, NY, Christopher Julian Hood, McKool Smith PC—D.C., Washington, DC, Gianni Cutri, Jared Michael Barcenas, Kirkland & Ellis LLP—Chicago, Chicago, IL, Harry Lee Gillam, Jr, Gillam & Smith, LLP, Marshall, TX, Jose Luis Patino, Foley & Lardner LLP—San Diego, San Diego, CA, Scott Wayne Hejny, McKool Smith P.C., Timothy J Dyll, AT & T Services Inc, Warren Henry Lipschitz, McKool Smith PC—Dallas, Dallas, TX, for Defendants.

LEAD CASE

MEMORANDUM OPINION AND ORDER

WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE

In these consolidated infringement actions, Plaintiff Sycamore IP Holdings LLC ("Sycamore") filed suit against a number of defendants grouped into four cases: Case No. 2:16–cv–588, against AT & T Corp., AT & T Services, Inc., and Teleport Communications America, LLC (collectively, "AT & T"); Case No. 2:16–cv–589, against CenturyLink Communications, LLC, and Qwest Corporation (collectively, "CenturyLink"); Case No. 2:16–cv–590, against Level 3 Communications, LLC ("Level 3"); and Case No. 2:16–cv–591, against Verizon Business Global, LLC, and Verizon Services Corporation (collectively, "Verizon"). On February 15, 2018, the Court was informed that the parties in the Verizon case have entered into a settlement agreement. Accordingly, this order will not address any issues relating to that case. The Court has set trial in the action against Level 3 to begin on April 23, 2018, with the trials in each of the other two cases to follow.

This order addresses a number of motions filed in advance of the Level 3 trial, some of which are filed by, or directed at, Level 3 alone, and some of which are filed by, or directed at, Level 3 and other defendants. This order will first address Sycamore's Motion for Partial Summary Judgment of Infringement by Performing the Accused Mappings Pursuant to the Accused Standards, Dkt. No. 185; Defendants' Motion for Summary Judgment of Noninfringement, No Direct Infringement, and No Willful Infringement, Dkt. No. 193; and Sycamore's Motion for Summary Judgment on the Scope of Level 3's Infringement, Dkt. No. 191. After construing the relevant claim terms, with the assistance of supplemental briefs, see Dkt. Nos. 418, 419, 420, 421, 512, and 514, and oral arguments by the parties at the motions hearing held on January 19, 2018, the Court DENIES Sycamore's motion for partial summary judgment of infringement (Dkt. No. 185), GRANTS the defendants' motion for summary judgment of non-infringement(Dkt. No. 193), and DENIES AS MOOT Sycamore's motion for summary judgment on the scope of Level 3's infringement (Dkt. No. 191).

This order also addresses four motions for summary judgment relating to defenses raised by Level 3 and other defendants: Defendants' Motion for Summary Judgment of Invalidity Under 35 U.S.C. § 102(f) and 35 U.S.C. § 102(a), Dkt. No. 179; Defendants' Motion for Summary Judgment of Invalidity Under 35 U.S.C. Section 101, Dkt. No. 180; Sycamore's Motion for Summary Judgment of No Inequitable Conduct, Dkt. No. 186; and Sycamore's Motion for Summary Judgment on Equitable Estoppel, Fraud, Patent Misuse, Laches, Unclean Hands, and Waiver, Dkt. No. 183. The Court DENIED the first three of those motions following argument at the motions hearing, with an explanation for the Court's ruling on each motion. The Court GRANTED the fourth motion in part and DENIED it in part. In this order, the Court will expand on the explanations given in open court for its rulings on each of those four motions. The reasons for the Court's rulings in each instance incorporate both the Court's remarks during the motions hearing and the written elaboration on those remarks set forth below.

BACKGROUND

Sycamore alleges that the defendants have infringed claims 1 and 3–8 of U.S. Patent No. 6,952,405 ("the '405 Patent").¹ The patent is directed to a problem that arises during the electronic communication of information over networks when different communication protocols are used for different portions of the communication path. Transmission protocols that are frequently used in local area networks ("LANs"), such as Gigabit Ethernet ("GbE") or Fibre Channel, are inefficient for transmitting data over long-haul communication networks that are designed to carry data at high speeds and over long distances. Long-haul networks, sometimes referred to as wide area networks ("WANs"), therefore typically use different transmission protocols from those used in local networks; for example, long-haul networks often rely on optical communication protocols such as Synchronous Optical Networking ("SONET"). When multiple protocols are used, it is often desirable that messages transferred from a LAN system to a WAN system be transferred without the loss or corruption of information, a process known as "transparent transcoding."

A. The '405 Patent

A problem that engineers in the industry encountered during their efforts to devise transparent transcoding schemes was that differences in the bandwidth used by the LAN and WAN systems resulted in the inefficient use of the available WAN bandwidth. '405 patent, col. 1, line 52, through col. 2, line 11. The objective of the '405 patent was to create a transcoding protocol that would, for example, compress a GbE signal into fewer bits, thus enabling two GbE signals to be sent at once over a SONET link. Id., col. 2, ll. 53–59. To achieve that objective, the inventors of the '405 patent devised a transcoding system in which, for example, an 80–bit information group from the GbE transmission is converted into a 65–bit information stream for transmission over the SONET link without the loss of any information. Id., col. 7, ll. 41–48; see also id., Fig. 6. The 65–bit stream includes not only data, but also bits that indicate the locations and identities of any control characters that were contained in the information group. Id., col. 2, ll. 41–52; see also id., col. 3, ll. 37–45.

The '405 patent refers to the input for the claimed encoding methods as an "information group." An "information group" is a series of bits comprising data words, control characters, or a combination of both data words and control characters. Dkt. No. 104, at 2. The output of the encoding methods is called the "encoded information stream." The parties agree that each "information group" is encoded into a single "encoded information stream," and that the two correspond one-to-one. See Dkt. No. 419, at 1 (Defendants: " 'Encoded information stream' refers only to the data corresponding to a single incoming 'information group.' "); Dkt. No. 420, at 1 (Sycamore: "The parties agree that each 'encoded information stream' corresponds to a single 'information group' and vice versa.").

Claim 1 recites a method in which the encoding occurs through one of two processes, depending on whether the information group includes control characters. Claim limitation 1(a). If the information group contains only data words and no control characters, the first process is used. The first step is to generate a "data indicator." Claim limitation 1(b). The data indicator consists of one or more bits indicating whether the information group includes any control characters. Dkt. No. 104. The data indicator is combined with the data words, and both are included in the encoded information stream. The parties agree that the data indicator and the data words must be combined as part of the same encoded information stream. Dkt. No. 419, at 10 (Defendants: "The limitations require that the recited claim components [i.e., the data indicator and data words]...be combined/included in one encoded information stream."); Dkt. No. 420, at 1 n.1 (Sycamore: "Sycamore agrees the referenced fields are contained within the same 'encoded information stream.' ").

If the information group contains one or more control characters, the encoding method uses the second process, which consists of four steps. First, the control characters are encoded to form "control codes." Claim limitation 1(c)(i). Second, a transition indicator is generated based on the number of control codes that are present in the information group. Claim limitation 1(c)(ii). A "transition indicator," which consists of one or more bits, indicates the occurrence of the last control code in the encoded information stream. Dkt. No. 110. Third, a location pointer is generated for each control code; the location pointer indicates the sequential position of the corresponding control character within the information group. Claim limitation 1(c)(iii). Finally, the control codes, data words, location pointers, and transition indicator are all combined to form the encoded information stream. Claim limitation 1(c)(iv).

Claim 8, the only other independent claim asserted in this action, teaches a nearly identical method for encoding a multi-word information group. If the information group does not include control characters, the data words and a data indicator are encoded into an encoded information stream. Claim limitation 8(a). If the information group includes control characters, then: (i) the control characters are encoded into control codes; (ii) a transition indicator is...