United States District Court, N.D. California, San Jose Division
ORDER DENYING DEFENDANT'S MOTION TO DISMISS;
GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION
FOR PARTIAL SUMMARY JUDGMENT RE: DKT. NOS. 212, 218
J. DAVILA United States District Judge.
PersonalWeb Technologies LLC (“PersonalWeb”) and
Level 3 Communications, LLC (“Level 3”)
(collectively, “Plaintiffs”) bring the instant
action for patent infringement against Defendant
International Business Machines Corporation
(“IBM” or “Defendant”). Presently
before the Court are two motions filed by IBM: IBM's
Motion for to Dismiss (Dkt. No. 212) and IBM's Motion for
Summary Judgment (Dkt. No. 218). Having carefully considered
the moving, opposing, and reply papers for both motions as
well as the arguments of counsel from the hearing on these
matters, the Court DENIES IBM's Motion to Dismiss and
GRANTS IN PART and DENIES IN PART IBM's Motion for
is a limited liability company organized under the laws of
Texas with its principal place of business in Tyler, Texas.
Dkt. No. 29 ¶ 4. Level 3 is a limited liability company
organized under the laws of Delaware with its principle place
of business in Broomfield, Colorado. Id. ¶ 5.
IBM is a New York corporation with its principal executive
offices at Armonk, New York. Id. ¶ 7.
PersonalWeb and Level 3 each own a fifty percent (50%)
undivided interest in U.S. Patent No. 8, 099, 420 (the
“'420 patent”). Id. ¶ 1. IBM is
a technology company which makes software and storage
products, including the Tivoli Storage Manager
(“TSM”). Id. ¶¶ 8-9.
The Asserted Patent
'420 patent relates to “data processing systems
wherein data items are identified by substantially unique
identifiers which depend on all of the data in the data items
and only on the data in the data items.” '420
patent, col. 1 ll. 20-22. The '420 patent belongs to a
chain of several continuation and divisional patent
applications, the earliest of which was filed on April 11,
1995. The '420 patent expired on April 11, 2015.
at issue is claim 166, which recites:
166. A system comprising hardware, including at least a
processor, and software, in combination with said hardware
(A) for a particular data item in a set of data items, said
particular data item comprising a corresponding particular
sequence of bits:
(a1) determine one or more content-dependent digital
identifiers for said particular data item, each said
content-dependent digital identifier being based at least in
part on a given function of at least some of the bits in the
particular sequence of bits of the particular data item,
wherein two identical data items will have the same digital
identifiers as determined using said given function; and
(a2) selectively permit the particular data item to be made
available for access and to be provided to or accessed by or
from at least some of the computers in a network of
computers, wherein the data item is not to be made available
for access or provided without authorization, as resolved
based, at least in part, on whether or not at least one of
said one or more content-dependent digital identifiers for
said particular data item corresponds to an entry in one or
more databases, each of said one or more databases comprising
a plurality of identifiers, each of said identifiers in each
said database corresponding to at least one data item of a
plurality of data items, and each of said identifiers in each
said database being based, at least in part, on at least some
of the data in a corresponding data item.
'420 patent, col. 56 l. 51-col. 57 l. 13.
The Accused Product
currently asserts claim 166 against a single product: TSM.
TSM is a data storage, back-up, and recovery product sold by
IBM. See Dkt. No. 217-4, Joint Statement of
Undisputed Facts (“JSUF”), ¶¶ 37-38.
IBM touts TSM as currently “support[ing] organizations
ranging from small businesses to large enterprises.”
Dkt. 232-1, Declaration of Benjamin J. Christoff in Support
of PersonalWeb's Opposition to IBM's Motion for
Summary Judgment (“Christoff MSJ Decl.”), Ex. 5
at 9. Customers can download the TSM software suite from IBM
using a website called Passport Advantage. JSUF ¶ 40.
TSM can be deployed in a wide variety of complex
environments, including “virtual, physical, and cloud
environments.” Dkt. No. 218-1, Declaration of Kenneth
R. Adamo in Support of IBM's Motion for Summary Judgment
(“Adamo MSJ Decl.”), Ex. 7 at 10.
includes “client-side deduplication” and
“server-side deduplication” features which help
prevent duplicate copies of the same data from being backed
up. JSUF ¶¶ 44-45. At a high level, this works by
calculating hash values on chunks of data and then using
those hash values to determine if that data has already been
backed up. See Christoff MSJ Decl., Ex. 3 at 40-42.
“Server-side deduplication” has been included in
TSM versions 6.1 and later. JSUF ¶ 44.
“Client-side deduplication” has been included in
TSM versions 6.2 and later. JSUF ¶ 45.
the years, the '420 patent (as well as other patents not
at issue here) has been part of several acquisitions and
patent licensing agreements. Several are relevant here:
12, 1996, the original assignee of the '420 patent,
Kinetech, Inc. (“Kinetech”), entered into a
Technology Transfer Agreement (“TTA”) with
Connected Corporation (“Connected”). Dkt. 212-1,
Declaration of Kenneth R. Adamo in Support of IBM's
Motion to Dismiss (“Adamo MTD Decl.”), Ex. 5. The
TTA granted an exclusive, field of use license to Connected,
On the terms and subject to the conditions set forth in this
Agreement, Kinetech grants to Connected, and Connected
accepts, a perpetual, exclusive, worldwide, transferable
(subject to Section 4) right and license to make, sell, use
and sublicense the Invention under the Patent Application,
but such license is limited solely for the purposes of
developing and operating value-added, online backup and file
recovery products and services, and Kinetech further grants
to Connected, and Connected accepts, a perpetual
nonexclusive, world-wide right and license to use and
sublicense the Invention under the Patent Application, but
such license is limited solely for purposes of developing and
operating value-added online remote desktop system
configuration management products and services (collectively,
the “Licensed Use”). . . . In addition, Connected
shall not during the pendancy of the Patent Application and
the life of any related patent use the Invention in any
manner outside of the Licensed Use and Kinetech reserves all
other rights not expressly granted to Connected hereunder.
Id. at 2 (TTA § 2.1). The TAA defined the
“Patent Application” as U.S. Patent Application
No. 08/425, 160 (the “'160 application”)
“including any . . . subsequently issued patent or
patents and all divisions, continuations,
continuations-in-part, and reissues thereof.”
Id. at 1. The '420 patent is a continuation of
an application which is a continuation of the '160
application. '420 patent.
also granted to Connected “the right, at its own
expense, to prosecute any infringer who is infringing on the
Licensed Use or the Software and any recovery in connection
therewith shall be the property of Connected.”
Id. at 7 (TTA § 2.7.4). However, it also
Kinetech shall have the right to join in the prosecution of
any claims referred to in the foregoing sentence, provided
that Kinetech shall bear its own costs and expenses,
including the cost of any separate counsel, and provided,
further, that in the event Kinetech wishes to join in the
prosecution of such claims without engaging separate counsel,
Kinetech shall share equally with Connected the cost of
prosecuting any such claims. Each party shall cooperate with
the other in connection with any infringement suits or claims
involving the Invention or the Software.
1999, IBM and the Hewlett-Packard Company (“HP”)
entered into a cross-license that granted to IBM ___ Adamo
MTD Decl., Ex. 8 at 3 (Cross-License § 2.1(a)). ___
Id. at 2 (Cross-License § 1.5(b)). On September
1, 2000, Kinetech entered into an agreement with Digital
Island, Inc. (“Digital Island”) in which Kinetech
assigned a 50% undivided interest in the '420
patent to Digital Island. Adamo MTD Decl., Ex. 1.
Digital Island assigned its 50% undivided interest to Savvis
Asset Holdings, Inc. on February 13, 2004, which then
assigned its interest to Mount Shasta Acquisition, LLC on
January 22, 2007, which merged with Level 3 that same day.
Adamo MTD Decl., Exs. 2, 3. On July 5, 2011, Kinetech
assigned its own 50% undivided interest the '420 patent
to PersonalWeb. Adamo MTD Decl., Ex. 4.
the rights granted under the TTA changed hands several times.
In November 2004, Iron Mountain, Inc. (“IM”)
acquired Connected, including the TTA. Adamo MTD Decl.. Ex. 6
at 1. In May 2011, Autonomy, Inc. (“Autonomy”)
purchased the digital assets of IM, including the TTA.
Id. at 2. In October 2011, HP acquired Autonomy,
including the TTA. Adamo MTD Decl.. Ex. 7 at 1.
August 2012, PersonalWeb initiated an arbitration against IM,
alleging material breach of the TTA and related claims. Adamo
MTD Decl.. Ex. 6 at 2. The arbitration ended in a settlement
agreement between PersonalWeb, IM, Autonomy, and HP, dated
May 19, 2014, in which IM, Autonomy, and HP agreed to
“transfer and assign to PersonalWeb the TTA and any
license rights included therein.” Id. at 9
(Settlement Agreement § 5.1.1). Thus, as of May 19,
2014, PersonalWeb not only held a 50% undivided interest in
the '420 patent, but also obtained the exclusive field of
use license granted under the TTA. See id.
on September 17, 2012, Plaintiffs (PersonalWeb and Level 3)
initiated the instant lawsuit in the Eastern District of
Texas, claiming that IBM infringed the '420 patent, as
well as U.S. Patent Nos. 5, 978, 791 (the “'791
patent”); 6, 415, 280 (the “'280
patent”); 6, 928, 442 (the “'442
patent”); and 7, 802, 310 (the “'310
patent”). Dkt. No. 1. On September 3, 2013, Plaintiffs
amended their Complaint to additionally accuse IBM of
infringing U.S. Patent Nos. 7, 945, 539 (the “'539
patent”); 7, 945, 544 (the “'544
patent”); 7, 949, 662 (the “'662
patent”); and 8, 001, 096 (the “'096
patent”). Dkt. No. 29 ¶¶ 1, 48. The
Amended Complaint identified TSM, as well as eight other IBM
products,  as infringing each of the nine Originally
Asserted Patents. Id. at ¶¶ 1, 9.
PersonalWeb served Infringement
Contentions on June 28, 2013, identifying seven of the
Originally Accused Products as infringing five of the
Originally Asserted Patents. Adamo MSJ Decl. Exs. 1-2.
PersonalWeb supplemented its Infringement Contentions on
November 19, 2013, adding accused products and modifying the
list of asserted claims. Adamo MSJ Decl. Exs. 3-4.
March 11, 2016, Judge Gilstrap in the Eastern District of
Texas issued a claim construction order. Dkt. No. 103. Four
days later, Judge Gilstrap transferred this case to this
district. Dkt. No. 107.
31, 2016, PersonalWeb sought leave in this district to amend
its Infringement Contentions to (1) make clarifying changes
related to certain terms that were construed by Judge
Gilstrap, (2) add an accused product, and (3) add claims
asserted against TSM. Dkt. No. 139. Magistrate Judge Cousins
granted PersonalWeb's first request, but denied the
remaining two. Dkt. No. 160. PersonalWeb served amended
infringement contentions pursuant to Judge Cousins's
order on August 11, 2016. Dkt. Nos. 189-3, 188-6.
fall, the parties took steps to narrow the case. In a letter
dated September 4, 2016, PersonalWeb agreed to limit the
accused products to TSM and CommonStore. JSUF ¶ 26. In
an email dated October 19, 2016, PersonalWeb stated that it
would not pursue infringement claims against CommonStore.
JSUF ¶ 27. Fact discovery closed on December 6, 2016.
Dkt. Nos. 165, 175, 176. On December 9, 2016, PersonalWeb
served an expert report on infringement, in which it only
covered infringement of claim 166 of the '420 patent by
TSM. Adamo MSJ Decl., Ex. 5. Expert discovery closed on
February 24, 2017. Dkt. Nos. 165, 208.
claims 1-3, 29 and 35 of the '791 patent and claims 1 and
10 of the '280 patent were invalidated through inter
partes review and/or reexamination proceedings. Dkt. No.
215. The parties stipulated to dismissing these claims with
prejudice, which the Court granted on March 6, 2017. Dkt. No.
219. The parties have not stipulated to dismissal of any
other claims in this case.
moves to dismiss all of PersonalWeb's infringement claims
for lack of prudential standing under 35 U.S.C. § 281.
Dkt. No. 212. IBM also moves for partial summary judgment
that (1) IBM's manufacture, sale, importation, and/or
offer for sale of TSM software does not infringe claim 166 of
the '420 patent; (2) TSM does not infringe claim 166 of
the '420 patent under the doctrine of equivalents; (3)
IBM does not indirectly or jointly infringe claim 166 of the
'420 patent; (4) TSM without the “client-side
deduplication” feature does not infringe claim 166 of
the '420 patent; (5) the claims no longer asserted by
PersonalWeb and not yet dismissed are not infringed; and (6)
IBM has not willfully infringed claim 166 of the '420
patent. Dkt. No. 218.
Federal Rule of Civil Procedure 12(b)(6)
Rule of Civil Procedure 8(a) requires a plaintiff to plead
each claim with sufficient specificity to “give the
defendant fair notice of what the ... claim is and the
grounds upon which it rests.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Although particular
detail is not generally necessary, the factual allegations
“must be enough to raise a right to relief above the
speculative level” such that the claim “is
plausible on its face.” Id. at 556-57. A
complaint which falls short of the Rule 8(a) standard may be
dismissed if it fails to state a claim upon which relief can
be granted. Fed.R.Civ.P. 12(b)(6). Dismissal of a claim under
Rule 12(b)(6) may be based on a “lack of a cognizable
legal theory or the absence of sufficient facts alleged under
a cognizable legal theory.” Balistreri v. Pacifica
Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988);
see Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d
1097, 1104 (9th Cir. 2008).
deciding whether to grant a motion to dismiss, the court
generally “may not consider any material beyond the
pleadings.” Hal Roach Studios, Inc. v. Richard
Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir.
1990). However, the court may consider material submitted as
part of the complaint or relied upon in the complaint, and
may also consider material subject to judicial notice.
See Lee v. City of Los Angeles, 250 F.3d 668, 688-89
(9th Cir. 2001). In the event that a motion to dismiss is
granted, “leave to amend should be granted
‘unless the court determines that the allegation of
other facts consistent with the challenged pleading could not
possibly cure the deficiency.'” DeSoto v.
Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.
1992) (quoting Schreiber Distrib. Co. v. Serv-Well
Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).
Federal Rule of Civil Procedure 56
motion for summary judgment should be granted if “there
is no genuine dispute to any material fact and the movant is
entitled to a judgment as a matter of law.” Fed. R.
Civ. R. 56(c); Addisu v. Fred Meyer, Inc., 198 F.3d
1130, 1134 (9th Cir. 2000). The moving party bears the
initial burden of informing the court of the basis for the
motion and identifying the portions of the pleadings,
depositions, answers to interrogatories, admissions, or
affidavits that demonstrate the absence of a triable issue of
material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986).
moving party meets this initial burden, the burden then
shifts to the non-moving party to go beyond the pleadings and
designate specific materials in the record to show that there
is a genuinely disputed fact. Fed.R.Civ.P. 56(c);
Celotex, 477 U.S. at 324. The court must draw all
reasonable inferences in favor of the party against whom
summary judgment is sought. Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
However, the mere suggestion that facts are in controversy,
as well as conclusory or speculative testimony in affidavits
and moving papers, is not sufficient to defeat summary
judgment. See Thornhill Publ'g Co. v. GTE Corp.,
594 F.2d 730, 738 (9th Cir. 1979). Instead, the non-moving
party must come forward with admissible evidence to satisfy
the burden. Fed.R.Civ.P. 56(c); see also Hal Roach
Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 1542,
1550 (9th Cir. 1990).
genuine issue for trial exists if the non-moving party
presents evidence from which a reasonable jury, viewing the
evidence in the light most favorable to that party, could
resolve the material issue in his or her favor. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49
(1986); see also Barlow v. Ground, 943 F.2d 1132,
1134-36 (9th Cir. 1991). Conversely, summary judgment must be
granted where a party “fails to make a showing
sufficient to establish the existence of an element essential
to that party's case, on which that party will bear the
burden of proof at trial.” Celotex, 477 U.S.
Motion to Dismiss
moves to dismiss PersonalWeb's infringement claims on the
grounds that it did not have standing under 35 U.S.C. §
281 at the time it filed this lawsuit in September 2012.
§ 281, only a “patentee” has standing to sue
for patent infringement. 35 U.S.C. § 281. This creates a
prudential standing requirement that a plaintiff in a patent
infringement action must satisfy in addition to Article III
standing. Alps S., LLC v. Ohio Willow Wood Co., 787