United States District Court, N.D. California
[Copyrighted Material Omitted]
Re: Dkt. No. 137.
For France Telecom S.A., Plaintiff: Jeffrey M. Fisher, LEAD ATTORNEY, Farella Braun & Martel LLP, San Francisco, CA; Elliot E. Polebaum, Eugene N Hansen, Joseph J. LoBue, PRO HAC VICE, Fried, Frank, Harris, Shriver and Jacobson LLP, Washington, DC; Henry Charles Lebowitz, James W. Dabney, Richard M. Koehl, PRO HAC VICE, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, NY; James Alexander Reese, Farella Braun and Martel LLP, San Francisco, CA.
For Marvell Semiconductor Inc., Defendant: Brian E Mack, Quinn Emanuel Urquhart and Sullivan LLP, San Francisco, CA; Edward John DeFranco, Quinn Emanuel Urquhart Sullivan, New York, NY; Eric Huang, Krista M. Rycroft, Raymond N. Nimrod, PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY; Eric Hui-chieh Huang, Quinn Emanuel Urquhart Oliver & Hedges LLP, New York, NY; Kevin P.B. Johnson, Quinn Emanuel Urquhart & Sullivan LLP, Redwood Shores, CA.
ORDER ON MARVELL'S MOTION FOR SUMMARY JUDGMENT
WILLIAM H. ORRICK, United States District Judge.
Defendant Marvell Semiconductor, Inc. (" Marvell" ), moves for summary judgment that U.S. Patent 5,446,747 (" the '747 Patent" ) is invalid because Claims 1 and 10 are merely mathematical algorithms or abstract ideas, and are not transformative or limited applications of those algorithms or ideas, and therefore fail to claim patent-eligible subject matter under 35 U.S.C. § 101. Marvell also seeks partial summary judgment on the issue of whether it is liable to plaintiff France Telecom S.A. (" France Telecom" ) for sales of allegedly infringing chips  sold abroad by a non-party affiliate, Marvell Asia Pte. Ltd. (" MAPL" ). Because Claims 1 and 10 recite an application of an abstract idea, rather than an abstract idea alone, Marvell's motion for summary judgment to invalidate the claims is DENIED. Because France Telecom cannot seek damages based on a third party's infringement outside the United States, Marvell's motion for partial summary judgment concerning its liability for the accused chips is GRANTED.
I. THE '747 PATENT
The '747 Patent " involves methods commonly referred to as 'turbo coding' for correcting errors in telecommunication and other data transmissions." France Telecom, S.A. v. Marvell Semiconductor, Inc., No. 12-cv-4967, 2014
WL 1007449, at *1 (N.D. Cal. Mar. 12, 2014). The technology claimed allows for more accurate and efficient data transmission and cellular communication. See Id. at *3. The patent expired on August 29, 2012. See Rycroft Decl. (Dkt. No. 137) Ex. 1; 35 U.S.C. § 154(a)(2).
Claim 1 of the patent recites the following:
1. A method for error-correction coding of source digital data elements, comprising the steps of:
implementing at least two independent and parallel steps of systematic convolutional coding, each of said coding steps taking account of all of said source data elements and providing parallel outputs of distinct series of coded data elements;
and temporally interleaving said source data elements to modify the order in which said source data elements are taken into account for at least one of said coding steps.
'747 Patent 14:46-56.
Claim 10 is dependent on Claim 1 and recites the following:
10. A method for decoding received digital data elements representing source data elements coded according to the coding method of claim 1, wherein said decoding method comprises an iterative
decoding procedure comprising the steps of:
in a first iteration, combining each of said received digital data elements with a predetermined value to form an intermediate data element,
decoding the intermediate data element representing each received data element to produce a decoded data element,
estimating said source data element, by means of said decoded data element, to produce an estimated data element,
and for all subsequent iterations, combining each of said received data elements with one of said estimated data elements estimated during a preceding iteration.
'747 Patent 15:15-42.
II. THE SALE OF ACCUSED CHIPS
MAPL is a Singapore corporation with operations based in Singapore. Matukaitis Decl. ¶ 10. Marvell and MAPL are both subsidiaries of Marvell Technology Group, Ltd. (" MTGL" ). Matukaitis Decl. ¶ 11. Neither MAPL nor MTGL are defendants in this action. MAPL, like Marvell, does not manufacture its own semiconductors. Rather, its chips are manufactured by third-parties primarily based in [TEXT REDACTED BY THE COURT]. Matukaitis Decl. ¶ 12. MAPL's customers submit purchase orders to MAPL [TEXT REDACTED BY THE COURT], the chips are then manufactured [TEXT REDACTED BY THE COURT] and delivered to MAPL's customers. See Matukaitis Decl. ¶ ¶ 12-13. [TEXT REDACTED BY THE COURT]. Matukaitis Decl. ¶ 16. According to MAPL's standard terms and conditions for purchases, [TEXT REDACTED BY THE COURT] Rycroft Decl. Ex. 3; Matukaitis Decl. ¶ 13.
France Telecom's damages consultant, Bradford Cornell, argues that Marvell may be liable for royalties exceeding [TEXT REDACTED BY THE COURT] units. Mot. (Dkt. No. 135-4) 6. Marvell contends, however, that [TEXT REDACTED BY THE COURT] of those units were produced and sold by MAPL abroad and should therefore be excluded from the damages calculation.
France Telecom filed this action on June 26, 2012, in the United States District Court for the Southern District of New York. Dkt. No. 1. On September 24, 2012, the action was transferred to this Court. Dkt. No. 30. On February 27, 2014, Marvell filed this motion. Dkt. No. 135. On March 12, 2014, I issued a Markman order construing certain disputed terms. Dkt. No. 141. A hearing was held on this motion on April 9, 2014.
Summary judgment is proper " if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating 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 deciding a summary judgment motion, the court must view the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The Patent Act explicitly states, " A patent shall be presumed valid." 35 U.S.C. § 282. " [A]ny attack on an issued patent based on a challenge to the eligibility of the subject matter" requires a " high level of proof." Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1342 (Fed. Cir. 2013). " [A] moving party seeking to invalidate
a patent at summary judgment must submit such clear and convincing evidence of facts underlying invalidity that no reasonable jury could find otherwise." SRAM Corp. v. AD-II Eng'g, Inc., 465 F.3d 1351, 1357 (Fed. Cir. 2006).
Marvell argues that the claims in the '747 Patent " recite nothing more than an algorithm for error correction coding that comprises only algorithmic steps, unconnected to any structure or specific application." Reply (Dkt. No. 148-3) 1 (emphasis omitted). Specifically, Marvell says, " This motion is based on the fact that the claims cover only an abstract idea." Mot. 7 n.5. Therefore, Marvell concludes, it is not patent eligible under 35 U.S.C. § 101.
A. Section 101 Of The Patent Act
The question of whether subject matter is patent-eligible, " while ultimately a legal determination, is rife with underlying factual issues." Ultramercial, 722 F.3d at 1339. Section 101 of the Patent Act sets forth categories of patent-eligible subject matter and states, " Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. " In choosing such expansive terms . . . Congress plainly contemplated that the patent laws would be given wide scope." Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). " Congress took this permissive approach to patent eligibility to ensure that ingenuity should receive a liberal encouragement." Bilski v. Kappos, 561 U.S. 593, 130 S.Ct. 3218, 3225, 177 L.Ed.2d 792 (2010) (citation and internal punctuation omitted).
The Act defines " process" as an " art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material." 35 U.S.C. § 100. " A process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. If new and useful, it is just as patentable as is a piece of machinery." Diamond v. Diehr, 450 U.S. 175, 183, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (quoting Cochrane v. Deener, 94 U.S. 780, 787-88, 24 L.Ed. 139, 1877 Dec. Comm'r Pat. 242 (1876)).
" The [Supreme] Court's precedents provide three specific exceptions to § 101's broad patent-eligibility principles: 'laws of nature, physical phenomena, and abstract ideas.'" Bilski, 130 S.Ct. at 3225. " The concepts covered by these exceptions are 'part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to none.'" Id. (quoting Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588, 1948 Dec. Comm'r Pat. 671 (1948)). " The [Supreme] Court has recognized, however, that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012).
A process that recites nothing more than an abstract idea is not patent-eligible. Bilski, 130 S.Ct. at 3229-30. As the Federal Circuit has noted, " Defining 'abstractness' has presented difficult problems, particularly for the § 101 'process' category." Ultramercial, 722 F.3d at 1342. " Members of ...