United States District Court, N.D. California
ORDER DENYING MOTION FOR ATTORNEY'S FEES Re: ECF No. 1060
JON S. TIGAR, District Judge.
Cisco Systems, Inc. ("Cisco"), Sprint Spectrum L.P. ("Sprint"), HTC America, Inc. ("HTC"), United States Cellular Corporation ("U.S. Cellular"), Motorola Mobility LLC, and Motorola Solutions, Inc. (collectively, "Motorola") (collectively, "Defendants"), prevailing defendants in this patent infringement action, move for an award of attorney's fees and sanctions in the form of expert witness expenses, pursuant to 35 U.S.C. § 285, 28 U.S.C. § 1927, and this Court's inherent authority. The matter came for hearing on June 24, 2014.
A. Patent-in-Suit and Asserted Claims
Plaintiff EON Corp. IP Holdings ("EON") asserted that Defendants infringed upon United States Patent No. 5, 592, 491 ("the 491 Patent").
The '491 Patent includes system claims 1, 12, and 13, and method claims 5 and 17. A systems claim includes structural elements; "unlike use of a system as a whole... [a] method or process consists of one or more operative steps." NTP, Inc. v. Research in Motion, Ltd. , 418 F.3d 1282, 1318 (Fed. Cir. 2005), cert. denied, 126 S.Ct. 1174 (2006).
The system claims read on a communication network. Claim 1 contains, among others, the limitations of a "network hub switching center, " '491 Patent 6:17, "subscriber units... including switching means, " id. 6:19-21, a "local base station repeater cell communicating with... subscriber units, " id. 6:22-26, and a "modem... for transferring [signals]... if  subscriber units are unable to directly communicate with said local base station repeater cell." Id . 6:57-64. Claim 12 contains, among others, limitations similar to the above in claim 1, except for the network hub switching center. Id . 8:11-35. Claim 13 contains, among others, limitations similar to the above in claim 1, but it does not explicitly recite the local base station repeater cell as a claimed element. Id . 8:36-54.
The claimed network functions as follows. When the subscriber units are able to directly communicate with the local base station repeater cell, they use that communication path ("Path A"). Id . 3:33-48. When the subscriber units cannot communicate through Path A, the switching means within the units transfer to communicate instead with the local base station repeater cell through the modem ("Path B"). Id . 3:49-48.
This feature is described in method claims 5 and 17. Claim 5 claims a method of communicating between a subscriber unit and a local base station repeater cell. The method includes the first steps of "determining whether a subscriber unit... is receiving a signal from said local base station repeater cell, " id. 7:9-12. If it is, it transmits data through Path A, id. 7:13-26, and if not, it transmits data through Path B. Id . 7:27-43. Similarly, claim 17 claims a method of communicating between a subscriber unit and a network hub switching center. If the subscriber unit is receiving a signal from the local base station repeater cell, data is transmitted between the subscriber unit and the network hub switching center through Path A. Id . 9:5-12. If not, data is transmitted between the subscriber unit and the network hub switching center through Path B. Id . 9:13-29.
B. Accused Products and Services
EON alleged that Defendants Sprint and U.S. Cellular directly infringed the '491 Patent by selling, offering to sell, making, and using the Sprint and U.S. Cellular Networks, respectively. EON's Patent Local Rule 3-1 and 3-2 Disclosures ("Infringement Contentions") 6:20-7:7, Exh. A to Declaration of Byron R. Chin, ECF No. 928-4. These networks are the wireless communication networks offered to Sprint and U.S. Cellular subscribers. Id . The networks provide access to wireless communication facilities, including cellular, LTE, and Wi-Fi facilities and their related components. Id . In addition, EON alleges that Sprint and U.S. Cellular indirectly infringe. Their subscribers allegedly directly infringe by using the networks, and Sprint and U.S. Cellular contribute to this direct infringement by providing material components. Id . 9:19-10:17. Sprint and U.S. Cellular also allegedly induce direct infringement by intentionally encouraging or instructing subscribers to use the infringing networks. Id.
EON also claimed that Defendants HTC and Motorola indirectly infringe by selling, offering to sell, making, using, and importing into the United States subscriber units that are material components of the claimed invention. Id . 10:18-11:20. EON further alleges that Defendant Cisco indirectly infringes by providing material components to mobile network operators ("MNOs") who make, use, sell or offer to sell femtocell networks, and to end-users who make and use femtocell networks. Exh. B to Declaration of John R. Gibson 13:17-14:2, ECF No. 924-8. EON also alleges that Cisco induces indirect infringement by encouraging or instructing MNOs and end-users to make, use, sell or offer to sell femtocell networks. Id.
Generally, EON had two theories of infringement. One is that Wi-Fi access points and "mobile hotspots" function as the modems of the claimed invention. These networks, EON argued, allow cell phones (allegedly equivalent to the claimed subscriber units) to establish Wi-Fi connections (allegedly equivalent to Path B) if there is no connection with a cellular tower (allegedly equivalent to Path A). The other theory was that femtocells, which are transceivers of cellular signals, provide ...