Veracode, Inc. v. Appthority, Inc.
| Decision Date | 30 September 2015 |
| Docket Number | CIVIL ACTION NO. 12-10487-DPW |
| Citation | 137 F.Supp.3d 17 |
| Parties | Veracode, Inc., a Delaware Corporation, and Rovi Solutions Corporation, a Delaware Corporation, Plaintiffs, v. Appthority, Inc., a Delaware Corporation, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Elaine Herrmann Blais, Douglas J. Kline, Michael G. Strapp, Molly Grammel, Srikanth K. Reddy, Goodwin Procter LLP, Boston, MA, Phong T. Dinh, Goodwin Procter LLP, Washington, DC, for Plaintiffs.
Craig R. Smith, Lando & Anastasi, LLP, Cambridge, MA, James Beard, Karen I. Boyd, Robert J. Kent, Turner Boyd LLP, Redwood City, CA, for Defendant.
Plaintiffs Veracode, Inc. and Rovi Solutions Corporation (collectively, "Veracode," except where otherwise noted) brought this action against Defendant Appthority, Inc., for infringing two patents, U.S. Patent No. 5,854,924 (the "'924 Patent")and U.S. Patent No. 7,752,609, (the "'609 Patent"), relating to the analysis and manipulation of computer code. The jury found that Appthority willfully infringed two claims (1 and 5) of the '924 Patentbut did not infringe any claims of the '609 Patent. The jury also found that all asserted claims of the patents-in-suit were valid. Following a separate presentation of evidence as to damages, the jury awarded $781,857 to Veracode. Before me now is an array of post-trial motions. For the reasons that follow, I conclude that the jury's findings and its damages award were supported by substantial evidence, that the claims of the patents-in-suit were valid, that Appthority's infringement of claims 1 and 5 of the '924 Patentwas willful, that an award of enhanced damages or attorneys' fees is unwarranted, and that a permanent injunction is appropriate to prevent further infringement of the '924 Patent.
The underlying claims are described in greater detail in my order on claim construction, see Veracode, Inc. v. Appthority, Inc. , 2013 WL 5587946 (D.Mass. Oct. 9, 2013), but a brief summary may be helpful here. Veracode is a computer security company founded in 2006 that provides a cloud-based platform for analyzing flaws and security risks in software applications, as well as providing remediation services to help developers fix the flaws in their code. Appthority, Veracode's competitor, provides a similar cloud-based platform for analyzing the enterprise risk—specifically through the identification of malware and risky behaviors—in mobile phone applications. Appthority first made its platform available to the public in 2012.
Veracode is the exclusive licensee of the '924 Patentissued in 1998 and owned by Rovi. The '924 Patentis a "static debugging tool ... to detect the presence of program errors and potential errors" in the machine-code version of a piece of software without actually running the analyzed software. Veracode also owns the '609 Patentissued in 2010 but claiming priority to 2002. The '609 Patentis a "software analysis framework" that consists of a method of decompiling machine code—which humans cannot interpret—into a form "that one of a certain skill can analyze."
Both patents generate an intermediate file from a program's binary code. Binary code is a machine-readable form of code that allows a computer to run a particular piece of software; it is originally written as source code by software developers and then compiled into binary form by a computer. Although binary code is not readable by humans, the intermediate file the patented technology generates is intelligible to persons of ordinary skill in the art of software development. A software developer can reverse engineer the intermediate code to reconstruct or approximate the program's original source code.
Veracode filed its initial complaint on March 16, 2012, alleging willful infringement of the '924and '609 Patentsby Appthority. Appthority asserted affirmative defenses of non-infringement and invalidity with respect to both patents. Following the completion of fact discovery, I conducted a Markman hearing and construed relevant claim terms. See generally Veracode , 2013 WL 5587946. Although the parties initiated summary judgment practice, I chose to bring the matter to trial for jury fact-finding.
Prior to trial, the parties agreed on limited claims and defenses each could assert at trial. The trial accordingly concerned asserted infringement by Appthority of claims 1, 5, and 17 of the '924 Patent1 and claims 1, 13, and 14 of the '609 Patent.2 Appthority's defenses for the jury were limited to anticipation, obviousness, and invalidity for lack of written description as to each patent. Id. Appthority's indefiniteness and other invalidity defenses were reserved for the court. Id.
I held a ten-day trial on liability followed by a two-day trial on damages. The jury returned a split verdict. It found that Veracode established by a preponderance of the evidence that the Appthority Platform infringes claims 1 and 5 of the '924 Patentbut not claim 17 or any of the claims of the '609 Patent. It further found that Veracode established by clear and convincing evidence that Appthority's infringement of the '924 Patentwas willful. The jury rejected all of the invalidity defenses submitted to it, finding that Appthority did not establish by clear and convincing evidence that any of the asserted claims of the '924or '609 Patentswere anticipated, obvious, or invalid for lack of written description. After a separate presentation of evidence on damages, the jury found that Veracode had sustained damages in the amount of $781,857 as a result of Appthority's infringement.
Following the verdict, the parties submitted a total of eleven post-trial motions. Both parties renewed (at least in part) their earlier Fed. R. Civ. P. 50(a)motions for judgment as a matter of law, filed motions for judgment on partial findings pursuant to Fed. R. Civ. P. 52(c), and seek the award of attorneys' fees under 35 U.S.C. § 285. Veracode also filed motions for a permanent injunction, the award of enhanced damages under 35 U.S.C. § 284, and for entry of judgment. Appthority has filed a motion for a new trial and/or remittitur, and seeks a stay of any injunction. After a hearing on these motions, I invited the parties to submit further briefing.3 I address these motions as a basis for entering a final judgment in this case.
In considering these motions, I am guided by several distinct standards of review, dictated by the standards applied in this circuit. See Jennings v. Jones , 587 F.3d 430, 435–36 (1st Cir.2009); see also i4i Ltd. P'ship v. Microsoft Corp. , 598 F.3d 831, 841 (Fed.Cir.2010), aff'd 564 U.S. 91, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011).
Most of the parties' motions seek judgment as a matter of law. A motion for judgment as a matter of law on patent claims is reviewed according to First Circuit case law. See Abbott GmbH & Co., KG v. Centocor Ortho Biotech, Inc. , 971 F.Supp.2d 171, 175 (D.Mass.2013); see also Versata Software, Inc. v. SAP Am., Inc. , 717 F.3d 1255, 1261 (Fed.Cir.2013), cert. denied , ––– U.S. ––––, 134 S.Ct. 1013, 187 L.Ed.2d 851 (2014). Under Fed. R. Civ. P. 50(a)(1), a party may seek judgment as a matter of law on an issue after it has been fully heard by the jury on the basis that "a reasonable jury would not have a legally sufficient evidentiary basis to find for the [other] party on that issue." Where, as here, the court reserves the legal questions raised by the motion until after the jury returns a verdict, a party may file a renewed JMOL motion and may request in the alternative a new trial under Fed. R. Civ. P. 59. See Fed. R. Civ. P. 50(b). A Rule 50(b)motion may be granted only on a ground that was also raised in the preverdict motion.4 See Parker v. Gerrish , 547 F.3d 1, 12 (1st Cir.2008)("a renewed motion for judgment as a matter of law under Fed. R. Civ. P. 50(b)is bounded by the movant's earlier Rule 50(a)motion" (quoting Correa v. Hosp. S.F. , 69 F.3d 1184, 1196 (1st Cir.1995)).
The burden for judgment as a matter of law, particularly after a jury verdict, is demanding. See Ortiz v. Jordan , 562 U.S. 180, 131 S.Ct. 884, 892, 178 L.Ed.2d 703 (2011); Monteagudo v. Asociación de Empleados del Estado Libre Asociado de Puerto Rico , 554 F.3d 164, 170 (1st Cir.2009). To prevail on a renewed motion for JMOL following a jury trial, the moving party must show that "the evidence...
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