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Open Text, S.A. v. Box, Inc.

United States District Court, N.D. California, San Jose Division

April 9, 2014

OPEN TEXT, S.A., Plaintiff,
v.
BOX, INC. AND CARAHSOFT TECHNOLOGY CORPORATION, Defendants

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Re: Docket No. 64].

For Open Text S.A., Plaintiff: Brian Jeffrey Eutermoser, Angela LeAnn Campbell, LEAD ATTORNEYS, Brian Jeffrey Eutermoser, Cooley LLP, Broomfield, CO; Britton Frederic Davis, LEAD ATTORNEY, PRO HAC VICE, Cooley LLP (CO-NA), Broomfield, CO; Christopher Charles Campbell, LEAD ATTORNEY, Frank V. Pietrantonio, John Adam Suppes, Cooley LLP, Reston, VA; Gregory N. Stillman, LEAD ATTORNEY, Brent Lee VanNorman, Hunton & Williams, Norfolk, VA; Peter Joseph Sauer, Sara Jane Radke , Sarah JoAnn Guske, LEAD ATTORNEYS, PRO HAC VICE, Cooley LLP, Broomfield, CO; Thomas J. Friel , Jr., LEAD ATTORNEY, Cooley Godward Kronish LLP, San Francisco, CA; Thomas Joseph Friel , Jr., LEAD ATTORNEY, PRO HAC VICE, Cooley LLP (CA N/A), an Francisco, CA; Wayne O. Stacy, LEAD ATTORNEY, Cooley Godward Kronish LLP, Broomfield, CO; Wayne Odis Stacy, LEAD ATTORNEY, PRO HAC VICE, Cooley Godward Kronish LLP - Colorado, Broomfield, CO.

For Box, Inc., Defendant: Mark Wayne Wasserman, Richard Cyril Sullivan , Jr., LEAD ATTORNEYS, Matthew Robertson Sheldon, Paulo L Sousa, Reed Smith LLP, Falls Church, VA; Stuart A. Shanus, LEAD ATTORNEY, Reed Smith Crosby Heafey LLP, Los Angelees, CA; Adaline J. Hilgard, Doyle Johnson, John P. Bovich, Kirin Kaur Gill, Reed Smith LLP, San Francisco, CA; Jennifer DePriest, Reed Smith LLP, Chicago, IL; Jesse Luke Miller, Jonah Dylan Mitchell, Scott David Baker, William Ross Overend, PRO HAC VICE, Reed Smith LLP, San Francisco, CA.

For Carahsoft Technology Corporation, Defendant: John P. Bovich, LEAD ATTORNEY, Reed Smith LLP, San Francisco, CA; Mark Wayne Wasserman, Matthew Robertson Sheldon, Richard Cyril Sullivan , Jr., LEAD ATTORNEYS, Paulo L Sousa, Reed Smith LLP, Falls Church, VA; Stuart A. Shanus, LEAD ATTORNEY, Reed Smith Crosby Heafey LLP, Los Angelees, CA; Adaline J. Hilgard, Doyle Johnson, Kirin Kaur Gill, Reed Smith LLP, San Francisco, CA; Jennifer DePriest, PRO HAC VICE, Reed Smith LLP, Chicago, IL.

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ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

EDWARD J. DAVILA, United States District Judge.

Open Text S.A. (" Open Text" ) brings this motion for a preliminary injunction to enjoin Box, Inc. (" Box" ) from " selling, offering to sell, licensing, offering to license, installing, offering for download, offering for installation, providing, or otherwise making available" any of its products or services containing " Box Edit" or " colorably similar features to customers, potential customers, or entities that have or may have 100 or more users." See Pl.'s Mot. for Prelim. Inj. (" Pl.'s Mot." ) at 24-25, Docket Item No. 65. This motion is limited to four patents from two patent families. The first family, the " Synchronization Patents," includes U.S. Patent No. 7,062,515 (" the '515 patent" ) and U.S. Patent No. 8,117,152 (" the '152 patent" ). The second family, the " Groupware Patents," includes U.S. Patent No. 7,287,055 (" the '055 patent" ) and U.S. Patent No. 7,299,258 (" the '258 patent" ).

The Court held a hearing on this motion on January 24, 2014. Having considered the parties' submissions, argument, and the relevant law, and for the reasons discussed herein, Open Text's motion to preliminarily enjoin Box is DENIED.

I. Background

A. Factual Background

Open Text is a Luxembourg corporation with its registered address at 29 Boulevard Royal, L-2449 Luxembourg. Complaint at ¶ 6, Docket Item No. 1. Open Text S.A. is a subsidiary of Open Text Corporation, a Canadian corporation with its principal place of business at 275 Frank Tompa Drive, Waterloo, Ontario, Canada. Id. Open Text Corporation distributes software products and provides customer support and professional services through a number of subsidiaries, including Open Text, Inc., which sells Open Text software and services in the United States. Id. at ¶ 7. Open Text Public Sector Solutions, Inc. (" OTPSS" ), a Virginia corporation with its headquarters in Arlington, Virginia, is a subsidiary of Open Text, Inc. Id. at ¶ 8. One of Open Text's core markets is Enterprise Content Management (" ECM" ), which refers to a variety of solutions for managing business content. Id. at ¶ 10. One such solution provides a repository for electronic documents and allows for functions such as organization, display, classification, access and version control, event auditing, rendition, and search. ECM also includes software tools and services for collaboration, records and email management, and archiving. Id. Open Text's ECM provides the foundation for its offerings in a broader market category known as Enterprise Information Management (" EIM" ). EIM encompasses capabilities such as Business Process Management (" BPM" ), Customer Experience Management (" CEM" ), Information Exchange (" IE" ), and Discovery. Open Text offers a range of software products and services in each of these areas. Id. at ¶ 11.

Box, Inc. is a Delaware corporation founded in 2005 with its headquarters at 4440 El Camino Real, Los Altos, California 94022. Id. at ¶ 23. Box exclusively offers " cloud-based" storage and content management products and services. Def.'s Opp'n to Mot. for Prelim. Inj. (" Def.'s Opp'n" ) at 4, Docket. Item No. 85. The cloud is often referred to as an " off-premises" solution because the end user does not own or control the servers that are used to deploy the features and functionality. Declaration of Grant Shirk (" Shirk

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Decl." ) ¶ 4, Docket Item No. 88. Box provides five versions of its software: Box Personal, Box Starter, Box Business, Box Enterprise, and Elite Plan. Pl.'s Mot. at 8, Dkt. No. 65. In October 2012, Box introduced a new access feature for all users called Box Edit. Id. Box Edit allows users to access documents stored in the Box database through a web browser and automatically syncs the locally-edited copy to the Box database. Id. at 10. In April 2013, Box released an " auto-updates" feature for Box Edit, which automatically integrates new product upgrades as they are released. Id.

Open Text argues the Elite Plan directly competes with Open Text's Content Server. Pl.'s Mot. at 9-10, Dkt. No. 65. Box released Box Enterprise in 2007 and the Elite Plan in late August 2013. Shirk Decl. ¶ 11, Dkt. No. 88; Pl.'s Mot. at 10, Dkt. No. 65. Box argues the Elite Plan was not Box's entry point into the market for customers with more than 100 users, it was the Enterprise software. Shirk Decl. ¶ 10, Dkt. No. 88. According to Box, the Elite Plan does not add any new functionality and instead provides Box customers with multiple enterprise ID's (commonly referred to as a " sandbox environment" ), Box Premier Support, and the ability to build custom internal applications on the Box platform. Id.

The instant preliminary injunction motion filed September 13, 2013 seeks to enjoin Box from providing its Box Edit feature. Def.'s Opp'n at 9, Dkt. No. 85.

B. Technology Background

Four patents from two patent families are at issue in this motion. The Synchronization Patents include the '515 and '258 patents and relate to cached file synchronization. The '515 patent was filed on December 28, 2001. The '152 patent is a continuation of U.S. Patent No. 7,590,655, filed Jan. 10, 2006, which in turn claims priority to the '515 patent. The Groupware Patents include the '055 and '258 patents and relate to web-based groupware systems. The Groupware Patents were filed on July 22, 2004 and claim priority to a U.S. Patent Application No. 08/955,569, filed on October 22, 1997.

1. Synchronization Patents

The Synchronization Patents purport to invent a software program that allows users to retrieve a file from a remote database, edit the file locally, then save the edited file directly back to the remote database. '515 patent, cl. 1. The software, described as a cache manager, stores the file as a local cached copy and determines if the cached file has been modified based on a notification from the file management system of an operating system. Id. This allows the user flexibility to choose which local application to edit the file. Id. at 3:54-61. Moreover, the use of the cache manager does not require specifically programmed applications to send notifications because the cache manager can seamlessly synchronize the cached file based on a notification from the file management system of the operating system. Id. at 3:62-67. Before the patent was filed, prior systems of document management attempted to address the drawbacks of file synchronization through the use of custom-designed tools for editing, secondary synchronization programs, and operating system-level implementation. Id. at 2:13-3:18.

2. Groupware Patents

The Groupware Patents purport to invent a collaborative workspace accessible through a web browser. '055 patent, cl. 1; '258 patent cl. 1. According to the invention, a primary user selects the parameters of the collaborative workspace. Id. Such parameters include a list of secondary users and the secondary users' ability to

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interact with the workspace based on varying levels of access to the workspace. Id. In response to the primary user's designations, a computer creates the dedicated network site, or collaborative workspace, on a network-connected server. '055 patent cl. 1, '258 patent, cl. 4. Further, users are able to select the types of user applications to be included in the workspace. '055 patent, cl. 4; '258 patent, cl. 1. The invention purports to overcome the prior art disadvantages of having a system administrator controlling the access levels of the system and the need for specialized software to be installed on users' computers. Id. at 1:52-59.

II. Legal Standard

Congress has authorized district courts in patent cases to grant injunctions " in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283 (2006). It is well-established that a preliminary injunction is an extraordinary remedy " not to be routinely granted" and reserved only for those cases where it is clearly warranted. High Tech Med. Instrumentation Inc. v. New Image Indus., Inc., 49 F.3d 1551, 1554 (Fed. Cir. 1995).

Because this motion arises in the context of a patent infringement action, Federal Circuit law applies. See Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1450, n.12 (Fed. Cir. 1988). Under Federal Circuit law, the court considers whether the plaintiff seeking a preliminary injunction can establish that: (1) he is likely to succeed on the merits; (2) he is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). These traditional four factors " apply with equal force to disputes arising under the Patent Act." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).

The Ninth Circuit has clarified that the elements of a preliminary injunction may be balanced such that " a stronger showing of one element may offset a weaker showing of another." Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). For example, " serious questions going to the merits" and a hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the other two elements of the Winter test are also met. Id. at 1132. Accordingly, this " serious questions" approach survives Winter when applied as part of the four-element Winter test. Id.

III. Discussion

A. Likelihood of Success

In order to demonstrate a likelihood of success on the merits, plaintiff must show that, in light of the presumptions and burdens that will inhere at trial on the merits, (1) plaintiff will likely prove that defendant infringes the asserted patents and (2) plaintiff's infringement claim will likely withstand defendant's challenges to the validity and enforceability of those patents. See Genentech, Inc. v. Novo Nordisk, A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997); Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1376 (Fed. Cir. 2009).

A patent claim is invalid by anticipation if the invention " was known or used by others in this country, or patented or described in a printed publication in this or a foreign country" before the filing, 35 U.S.C. § 102(a), or " patented or described in a printed publication in this or a foreign country or in public use or on sale in this

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country" more than a year before the filing date. 35 U.S.C. § 102(b). Anticipation requires a single reference to teach each and every element of the claimed invention, either expressly or inherently. Perricone v. Medicis Pharmaceutical Corp., 432 F.3d 1368, 1375 (Fed. Cir. 2005).

A patent claim is invalid for obviousness " if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." 35 U.S.C. § 103(a). Under this flexible inquiry, the court considers the scope and content of the prior art, the differences between the prior art and the asserted claims, the level of ordinary skill in the art, and any secondary considerations of nonobviousness. KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 426, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). A patent claim is obvious if the combination of familiar elements according to known methods yields only predictable results or offers an obvious solution to a known problem. Id. at 415-421. The Supreme Court in KSR emphasized the role of " common sense" in determining whether a patent is obvious at the time of invention. Id. at 421.

Because a patent is presumed valid, an alleged infringer must establish invalidity by clear and convincing evidence at trial. Titan Tire, 566 F.3d at 1376. At the preliminary injunction stage, the accused infringer similarly bears the burden to present evidence of invalidity. Id. However, rather than clear and convincing, the accused infringer need only establish a " substantial question" of invalidity. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1358 (Fed. Cir. 2001). Once the alleged infringer has raised a substantial question regarding validity, the plaintiff must bring forth evidence to demonstrate that the alleged infringer's invalidity defense " lacks substantial merit." Titan Tire, 566 F.3d at 1378. If, after weighing the available evidence for and against validity, the court determines that the plaintiff fails to show the invalidity defense lacks substantial merit, it necessarily follows that the plaintiff cannot show a likelihood of success on the merits. Id. at 1379.

Open Text alleges Box infringes claims 1-5 and 7-10 of the '515 patent, claims 8-10 and 12 of the '152 patent, claims 1, 2, 4, and 5 of the '055 patent, and claims 1-3 and 5 of the '258 patent. Box does not dispute any infringement assertions in the instant motion and instead, contends the asserted claims are all invalid under 35 U.S.C. § 102 for anticipation and/or 35 U.S.C. § 103 for obviousness. For the reasons discussed below, the Court finds Box that has raised substantial questions concerning the validity of OpenText's Synchronization and Groupware patents.

1. The Synchronization Patents

Box cites five prior art references as anticipating and/or rendering obvious claim 1 of the '515 patent and corollary claim 8 of the '152 patent: (1) WS_FTP Pro User's Guide, Ver. 5 (" WS_FTP Pro" ), (2) Coda Distributed File System client systems (" Coda" ),[1] (3) GroupWise 5.5 User's Guide (" GroupWise 5.5" ), (4) U.S. Patent No. 5,805,809 (" the '809 patent" , and (5) U.S. Patent No. 6,119,151 (" the '151 patent" ). None of the references were considered by the examiner during the prosecution of the patents. The Court has considered all references and finds

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that Box raises a substantial question as to the validity of claims 1-5 and 7-10 of the '515 patent and claims 8-10 and 12 of the '152 patent in light of WS_FTP Pro in combination with the knowledge of a person of ordinary skill in the art.

The '515 and '152 patent share a specification. Claim 1 of the '515 patent relates to a system for synchronizing a cached file while claim 1 of the '152 patent covers the method for synchronizing a cached file. Claim 1 of the '515 patent is exemplary:

A system for synchronizing a cached file with a database:

a computer processor;
a network connection device operable to establish a connection with a database;
a computer readable memory containing a local cache; and
a software program, executable to run in user space on a client computer, stored on
a computer medium and executable by the computer processor to:
send a request to the database for a file;
receive the file at the client computer directly from a database;
store the file as a cached file in the local cache;
notify the operating system to open the cached file using a locally running application associated with the file type for the cached file;
determine if the cached file at the client computer has been modified by a user using the locally running application based on a notification from a file management system of an operating system; and
if the cached file has been modified, save the cached file from the cache directly to the database.

The parties dispute the following claim limitations: (1) software program to be executable in user space; (2) locally cached file that is opened in a locally running application; and (3) determination of a modified cached file based on a notification from a file management system of an operating system. For the reasons set forth below, Box raises a substantial question ...


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