Alarm.com, Inc. v. Securenet Techs. LLC
Alarm.com, Inc. v. Securenet Techs. LLC
Opinion of the Court
Currently pending before the Court is Defendant's Motion for Summary Judgment. (D.I. 175). The parties have fully briefed the issues. (D.I. 176, 182, 198). The Court heard oral argument on December 3, 2018. (D.I. 208). After considering the briefing and arguments, the Court GRANTS-IN-PART and DENIES-IN-PART Defendant's Motion.
I. Background
Plaintiffs' predecessor-in-interest iControl Networks, Inc. filed this suit against Defendant SecureNet Technologies LLC on September 11, 2015. (D.I. 1). The suit asserted United States Patent Nos. 7,855,635 ("the '635 patent"), 8,473,619 ("the '619 patent"), 8,478,844 ("the '844 patent"), and 8,073,931 ("the '931 patent"). (Id. ¶¶ 3-7). The patents-in-suit are generally related to integrating an alarm system with an external security network and other interfaces. ( '635 patent, Abstract; '619 patent, Abstract; '844 patent, Abstract; '931 patent, Abstract).
On June 23, 2016, Plaintiffs Alarm.com and ICN Acquisition (collectively, "Plaintiffs") entered into an Asset Purchase Agreement with iControl Networks to purchase the patents-in-suit. (D.I. 177 at 209). Plaintiff ICN is a wholly-owned subsidiary of Plaintiff Alarm.com. (D.I. 186 ¶ 2). On March 8, 2017, Plaintiff ICN completed its acquisition of the patents-in-suit. (D.I. 177 at 209, 255). On March 29, 2017, the Court substituted Alarm.com and ICN for iControl as Plaintiffs in this action. (D.I. 28). Defendant filed a Motion for Summary Judgment on October 30, 2018. (D.I. 175).
II. Legal Standard
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and *548the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party has the initial burden of proving the absence of a genuinely disputed material fact relative to the claims in question. Celotex Corp. v. Catrett ,
The burden then shifts to the non-movant to demonstrate the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. ,
When determining whether a genuine issue of material fact exists, the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Scott v. Harris ,
III. Discussion
A. Indefiniteness
Section 112 requires that "a patent's claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty." Nautilus, Inc. v. Biosig Instruments, Inc. ,
Defendant argues that the term "objects" as used in the '931, '619, and '844 patents is indefinite because it is vague, has no discernible scope, is used in different contexts, and the experts agree that "objects" can mean anything. (D.I. 176 at 15-18). Plaintiffs reply that Defendant has failed to establish that "objects" is not reasonably certain in the context of the intrinsic evidence, that there is a material factual dispute as to whether a person of ordinary skill in the art would understand "objects' with reasonable certainty, and that Defendant's own conduct confirms "objects" was understood with reasonable certainty. (D.I. 182 at 17-22). For the following reasons, I determine that "objects" is not indefinite.
The claims of the '931, '619, and '844 patents use the term "objects" in substantially similar ways. For example, claim 1 of the '931 patent is representative:
1. A device comprising:
a touchscreen at a first location, wherein the touchscreen includes a processor coupled to a local area network (LAN) and a security system at the first location; and
a plurality of interfaces presented by at least one application executing on the processor of the touchscreen and presented to a user via the touchscreen, wherein the plurality of interfaces include a security interface and a network interface, wherein the security interface provides the user with control of functions of the security system and access to data collected by the security system, wherein the network interface allows the user to transfer content to and from wide area network (WAN) coupled to the LAN; and
a remote server at a second location, wherein the remote server is coupled to the touchscreen, the remote server managing at least one of the touchscreen and the security system, wherein objects are maintained on the remote server that correspond to at least one of at least one security system component of the security system and at least one network device of the LAN.
( '931 patent, cl. 1).
First, Defendant argues that the term as used in the claims is vague. However, as Defendant admits, the claim language makes clear that "objects" are something "that must be maintained on a server remote from the home being monitored." (D.I. 176 at 15). Being maintained on a server indicates that "objects" are intangible. Furthermore, the claim language indicates that "objects" are capable of corresponding to system components and network devices. This would indicate to a person of ordinary skill in the art that "objects" refers to some sort of data or information maintained on the remote server.
Second, Defendant argues, "The '931, '619, and '844 specifications confusingly refer to 'objects' in a variety of contexts" and do not clarify the vague meaning of "objects" as used in the claims. (D.I. 176 at 16). In one section, the specification defines "objects" as "devices" including sensors, camera, home security panels, and automation devices." ( '931 patent col. 8:45-49).
*550In another section, the specification refers to the "management of[ ] the objects associated with an integrated security system installation." (Id. col. 8:37-40). Finally, a third portion of the specification refers to "media objects" like "video, photos, and widget content." (Id. col. 9:55-60). Yet, as discussed above, the claim language makes clear that an "object" must be maintained on a remote server. Therefore, a person of ordinary skill in the art would not confuse the specification's references to "objects" as physical devices with the term as used in the claims. Moreover, the reference to "media objects" is consistent with a broad definition of the term "objects" to include data or information. A term's broad scope does not make it indefinite. BASF ,
Finally, Defendant argues that the "three technical experts in this case agree that ... the term 'objects' has several meanings. (D.I. 176 at 18). This overstates and misconstrues the testimony of the technical experts. Plaintiffs' expert Dr. Clark defined "object" as "a discrete entity that can contain ... bits and bytes that represent just about anything." (D.I. 177, Ex. 7 at 191:17-20). Plaintiffs' other expert, Dr. Rhyne, stated that an object is "a data construct referenced by an identifier." (Id. , Ex. 8 ¶ 128). At his deposition, Dr. Rhyne stated that a data construct could be a variety of things. (Id. , Ex. 9 at 149:9-12). However, the fact that a term can be defined broadly does not mean that the term is indefinite. BASF ,
The claim language and the specification of the patents-in-suit informs a person of ordinary skill in the art of the meaning of "objects" with the "reasonable certainty" required by § 112. It is clear that "objects" refers to data. While the range of "data" covered by the term may be broad, a broadly-defined term does not make the term indefinite. However, given the dispute as to the meaning of " objects," the Court will adopt the construction put forth by the parties: "data representing information about component(s) or device(s)." (D.I. 207). This construction gives effect to the plain meaning of the term in the context of the patents. The Court DENIES Defendant's Motion to find the term "objects" indefinite.
B. Standing
Defendant alleges that Plaintiff Alarm.com does not have standing to sue as a co-plaintiff, as it is neither the owner of the patents nor has it shown it holds an exclusive license. (D.I. 176 at 19). In response, Plaintiffs assert that Plaintiff Alarm.com does have standing to sue and there is a dispute of material fact as to whether Plaintiff Alarm.com is an implied exclusive licensee. (D.I. 182 at 13). For the following reasons, I determine that Plaintiff Alarm.com does have standing to sue.
"[T]he touchstone of constitutional standing in a patent infringement suit is whether a party can establish that it has an exclusionary right to suffer legal injury." WiAV Sols. LLC v. Motorola, Inc. ,
"To be an exclusive licensee for standing purposes, a party must have received, not only the right to practice the invention within a given territory, but also the patentee's express or implied promise that others shall be excluded from practicing the invention within that territory as well." Rite-Hite Corp. v. Kelley Co., Inc. ,
It is undisputed that there is no express exclusive license from Plaintiff ICN to Plaintiff Alarm.com. Therefore, to determine whether Plaintiff Alarm.com has legal standing, the Court must ask whether it has an implied exclusive license. There is no dispute between the parties that Plaintiff ICN is wholly-owned by Plaintiff Alarm.com. The President of both Alarm.com and ICN declared that "ICN was set-up as a holding company" and does not "have an existence separate from Alarm.com, in that Alarm.com controls all of ICN's business." (D.I. 186 ¶ 3).
*552There are no disputed facts underlying the determination of whether Plaintiff Alarm.com has an implied exclusive license from Plaintiff ICN. The undisputed facts clearly indicate that there was such an implied exclusive license. As such, Plaintiff Alarm.com has standing to sue for both equitable and monetary relief. Defendant's Motion for Summary Judgment on Plaintiff Alarm.com's standing is DENIED.
C. Lost Profits
Defendant asserts that even if Plaintiff Alarm.com has standing to sue for lost profits, it cannot pursue its own lost profits prior to Plaintiff ICN's acquisition of the patents-in-suit. (D.I. 176 at 22). Plaintiffs argue that Plaintiff Alarm.com may seek its own lost profits from the date the Asset Purchase Agreement was signed. (D.I. 182 at 29). The parties agree that there are no material factual disputes regarding this issue. (D.I. 207). For the following reasons, I find that Plaintiff Alarm.com may not recover its own lost profits prior to March 8, 2017, the date that Plaintiff ICN acquired the patents-in-suit.
A plaintiff may recover pre-assignment damages, including lost profits, where "the assignment of a patent is coupled with an assignment of a right of action for past infringements." Arachnid ,
Here, it is undisputed that the Patent Assignment Agreement explicitly assigned Plaintiff ICN the right to seek damages for past infringement. (D.I. 177, Ex. 10 ¶ 1(c) ). Through its implied exclusive license from ICN, Alarm.com also enjoys that right. However, iControl could not have assigned the right to Plaintiff Alarm.com's pre-assignment lost profits damages because iControl had no legal rights to Plaintiff Alarm.com's sales. Plaintiff Alarm.com's pre-assignment sales of products embodying the patents-in-suit had no positive economic impact on iControl. In fact, before this suit was instituted, iControl sued Alarm.com for infringement of these same patents. Therefore, Plaintiffs cannot seek their own purported pre-assignment lost profits damages, as the right to those damages could not have been assigned by iControl.
*553Moreover, Plaintiffs' argument that the Asset Purchase Agreement gave Plaintiff Alarm.com sufficient exclusionary rights such that it can now recover its own lost profits for that period is unavailing. The Asset Purchase Agreement merely settled that Plaintiff Alarm.com would gain exclusionary rights in the patent at some future time. Plaintiffs point to the provision prohibiting iControl from settling this suit. However, a contractual provision that the patentee not settle a suit for damages which will, at some point in the future, be assigned to the Plaintiff is not sufficient. The Purchase Agreement did not grant Plaintiffs the right to immediately begin enforcing exclusionary rights. It did not entitle Plaintiffs to join this lawsuit at that time. Plaintiffs were only permitted to replace iControl once the assignment of the patents-in-suit was complete. The prohibition on settlement merely allowed Plaintiffs to protect its future right to pursue iControl's lost profits-it did not create a new right for Plaintiffs to seek their own lost profits for the period that the sale was pending. Thus, as a matter of law, Plaintiff Alarm.com may not recover its own lost profits before March 7, 2018. Defendant's Motion for Summary Judgment as to pre-assignment lost profits is GRANTED.
D. Indirect Infringement Liability
Defendant argues that there is no evidence sufficient to create a triable issue of fact that Defendant either had pre-suit knowledge of the patents-in-suit or was willfully blind to the existence of the patents. (D.I. 176 at 28). Plaintiffs, in response, argue that there are material disputed facts as to whether Defendant was willfully blind. (D.I. 182 at 34). For the following reasons, I determine that there is no pre-suit liability for indirect infringement of the patents-in-suit.
Liability for indirect infringement requires that the infringer have knowledge of or be willfully blind to both the patents and infringement. Global-Tech Appliances, Inc. v. SEB S.A. ,
Plaintiffs point to three pieces of evidence: 1) testimony of iControl's former CEO Paul Dawes that he believed Defendant was aware of the patents given how closely Defendant copied what iControl was doing (D.I. 183, Ex. 5 at 104:9-105:10); 2) Defendant had access to an embodiment of the '931, '619, and '844 patents between 2008 and 2009 (D.I. 182 at 34); and 3) Defendant's CEO "admitted that he knew of the 2013 lawsuit between Alarm.com and iControl involving the '931, '619, and '844 patents" and did nothing to investigate the lawsuit. (Id. at 34-35).
*554This evidence at most frames Defendant as a "reckless or negligent defendant-not a willfully deliberate one." Apeldyn Corp. v. AU Optronics Corp. ,
Finally, Defendant's awareness that a competitor is being sued for infringement and a failure to investigate that lawsuit is not enough to show willful blindness. While Plaintiffs at oral argument stated that the product at issue in that lawsuit was "incredibly similar" to the Defendant's own product, this cannot raise an inference of willful blindness. Like in Apeldyn , where the defendant "would not initiate the collection of patents issued to other companies" with competing technology,
IV. Conclusion
For the foregoing reasons, the Court GRANTS Defendant's Motion for Summary Judgment as to pre-assignment lost profits and pre-suit liability for indirect infringement of the patents-in-suit and DENIES Defendant's Motion as to indefiniteness of the term "objects" and Plaintiff Alarm.com's standing.
An accompanying order will be entered.
The Court reserves determination on the issue of compliance with the marking statute until the pretrial conference.
Defendant argues that these statements were introduced by Plaintiff to create a material dispute of fact because the statements are factually inconsistent with Mr. Trundle's deposition. (D.I. 208 at 31:10-12). The Court disagrees. Mr. Trundle's declaration merely expands on his more casual statements made at deposition but is not clearly inconsistent with his deposition statements. Therefore, the declaration does not create a dispute of material fact as Defendant has not introduced any evidence contradicting the declaration.
It also would be inadmissible. It is not based on personal knowledge and it is not offered as expert witness testimony.
Reference
- Full Case Name
- ALARM.COM, INC. and ICN Acquisition, LLC, Plaintiffs v. SECURENET TECHNOLOGIES LLC
- Cited By
- 1 case
- Status
- Published