Digital Reg of Texas, LLC v. Adobe Systems Incorporated et al

Filing 750

ORDER by Judge Claudia Wilken ON POST-VERDICT ( 710 , 712 , 742 , 743 ) MOTIONS (ndr, COURT STAFF) (Filed on 11/17/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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DIGITAL REG OF TEXAS, LLC,

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Plaintiff,

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ADOBE SYSTEMS, INC., et al.,
Defendants.
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Plaintiff Digital Reg of Texas, LLC, moves for judgment as a

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United States District Court
For the Northern District of California

ORDER ON POSTVERDICT MOTIONS
(Docket Nos. 710,
712, 742, 743)

v.

8
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No. C 12-1971 CW

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matter of law (JMOL) that its claims in dispute with regard to

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U.S. Patent No. 6,389,541 (the '541 patent) are not invalid, and

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that Defendant Adobe Systems, Inc., infringed that patent.

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alternative, Digital Reg moves for a new trial with regard to the

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'541 patent.

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JMOL that it did not infringe the '541 patent.

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set forth below, Digital Reg's motions for JMOL and for a new

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trial are DENIED; and Adobe's motion for JMOL is DENIED.

In the

Adobe opposes both motions, and also cross-moves for
For the reasons

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BACKGROUND

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In this patent infringement case, Digital Reg sued Adobe,

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alleging infringement of the '541 patent and U.S. Patent No.

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6,751,670 (the '670 patent).1

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argued that the asserted claims were invalid.

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//

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//

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//

Adobe denied that it infringed, and

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1

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Neither party seeks relief with regard to the '670 patent.

At trial, the jury made the following findings:

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Direct Infringement

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Patent No.

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Claim No.

Adobe Product

Jury Finding

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'670 patent

Claim 45

Activation

Not infringed

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'670 patent

Claim 45

LiveCycle

Not infringed

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'670 patent

Claim 52

LiveCycle

Not infringed

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Indirect Infringement

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Patent No.

Claim No.

Adobe Product

Jury Finding

'541 patent

Claim 1

Activation

No decision

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United States District Court
For the Northern District of California

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'541 patent

Claim 2

Activation

No decision

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'541 patent

Claim 4

Activation

No decision

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'541 patent

Claim 13

Activation

No decision

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'670 patent

Claim 45

Activation

Not infringed

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'541 patent

Claim 1

Flash

No decision

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'541 patent

Claim 2

Flash

No decision

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'541 patent

Claim 4

Flash

No decision

'541 patent

Claim 13

Flash

No decision

'541 patent

Claim 1

LiveCycle

Not infringed

'541 patent

Claim 2

LiveCycle

Not infringed

'541 patent

Claim 4

LiveCycle

Not infringed

'541 patent

Claim 13

LiveCycle

Not infringed

'670 patent

Claim 45

LiveCycle

Not infringed

'670 patent

Claim 52

LiveCycle

Not infringed

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//
//
//
//

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2

Invalidity - Anticipation

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Patent No.

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Claim No.

Jury Finding

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'670 patent

Claim 32

Not anticipated

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'670 patent

Claim 45

Not anticipated

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'670 patent

Claim 52

Not anticipated

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Invalidity - Obviousness

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Patent No.

Claim No.

Jury Finding

'541 patent

Claim 1

Obvious

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'541 patent

Claim 2

Obvious

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United States District Court
For the Northern District of California

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'541 patent

Claim 4

Obvious

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'541 patent

Claim 13

Obvious

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'670 patent

Claim 32

Obvious

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'670 patent

Claim 45

Obvious

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'670 patent

Claim 52

Obvious

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Having found each of the disputed patent claims to be

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obvious, and therefore invalid, the jury awarded Digital Reg no

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damages.

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The parties made their initial motions for JMOL on September

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4, 2014, and their renewed motions for JMOL on October 6, 2014.

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The renewed motions are now fully briefed.

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DISCUSSION
I.

Motions for JMOL
A.

Legal Standard

A motion for judgment as a matter of law after the verdict
renews the moving party's prior Rule 50(a) motion for judgment as
a matter of law at the close of all the evidence.
50(b).

Fed. R. Civ. P.

Judgment as a matter of law after the verdict may be

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granted only when the evidence and its inferences, construed in

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the light most favorable to the non-moving party, permits only one

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reasonable conclusion as to the verdict.

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443 F.3d 1050, 1062 (9th Cir. 2006).

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conflicting evidence, or where reasonable minds could differ over

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the verdict, judgment as a matter of law after the verdict is

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improper.

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772, 775 (9th Cir. 1990); Air–Sea Forwarders, Inc. v. Air Asia

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Co., 880 F.2d 176, 181 (9th Cir. 1989).

Josephs v. Pac. Bell,

Where there is sufficient

See, e.g., Kern v. Levolor Lorentzen, Inc., 899 F.2d

United States District Court
For the Northern District of California

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C.

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Digital Reg moves for JMOL on the grounds that (1) the

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evidence presented at trial was legally insufficient to support

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the jury's finding of invalidity of the '541 patent; and (2) a

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reasonable jury could only have concluded that Adobe indirectly

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infringed the '541 patent.

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Digital Reg's Motions

1.

Invalidity

Under 35 U.S.C. § 103(a), a patent is invalid "if the

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differences between the subject matter sought to be patented and

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the prior art are such that the subject matter as a whole would

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have been obvious at the time the invention was made to a person

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having ordinary skill in the art to which said subject matter

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pertains."

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the predictable use of prior art elements according to their

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established functions."

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398, 417 (2007).

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considered as a whole and the claims must be considered in their

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entirety."

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(Fed. Cir. 1998).

To avoid being obvious, a patent must be "more than

KSR Int'l Co. v. Teleflex Inc., 550 U.S.

To determine obviousness, "the invention must be

Kahn v. General Motors Corp., 135 F.3d 1472, 1479

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Although obviousness is a question of law that the Court

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decides de novo, the Court nonetheless "treats with deference the

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implied findings of fact made by the jury."

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Samsung Elecs. Co., 2014 U.S. Dist. LEXIS 127973, at *97 (N.D.

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Cal.) (citing Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688

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F.3d 1342, 1360 (Fed. Cir. 2012)).

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inquiries are "(1) the scope and content of the prior art; (2) the

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level of ordinary skill in the pertinent art; (3) the differences

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between the claimed invention and the prior art; and (4) evidence

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United States District Court
For the Northern District of California

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of secondary factors, such as commercial success, long-felt need,

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and failure of others."

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F.3d 1296, 1310 (Fed. Cir. 2011) (citing Graham v. John Deere Co.,

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383 U.S. 1, 17-18 (1966)).

Apple, Inc. v.

The underlying factual

Retractable Techs., Inc. v. Becton, 653

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Because the jury made no express findings of fact, the Court

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must "discern the jury's implied factual findings by interpreting

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the evidence consistently with the verdict and drawing all

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reasonable inferences in [the non-moving party's] favor."

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Textilfarben GmbH v. C.H. Patrick Co., 464 F.3d 1356, 1361 (Fed.

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Cir. 2006).

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resolved the underlying factual disputes in favor of the verdict,"

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and accepts those factual findings "if they are supported by

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substantial evidence."

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The Court then considers de novo whether the legal conclusion of

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obviousness was "correct in light of the presumed jury fact

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findings."

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Dystar

In doing so, the Court "presume[s] that the jury

Kinetic Concepts, 688 F.3d at 1356-57.

Id. at 1357.
a.

Evidence of Obviousness

Digital Reg argues that there was insufficient evidence at
trial for a finding of obviousness because (1) the prior art did
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not disclose all of the elements claimed in the '541 patent and,

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in particular, the prior art did not disclose the "token"

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requirement;2 (2) there was no teaching to modify or other

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evidentiary basis of a motive to modify the prior art; (3) there

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were differences in function between the claimed invention and the

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prior art; and (4) the prior art teaches away from the missing

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limitations.

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The Court is not persuaded.

First, the jury was presented with evidence that the prior
art disclosed or rendered obvious the "token" requirement.

United States District Court
For the Northern District of California

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Adobe's expert, Dr. Stephen Wicker, testified that the prior art

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Schull patent does not disclose a yes/no indicator within the

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token.

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that the Schull patent disclosed generating a token after

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receiving authorization through an independent channel, that such

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permission could be moved from the server into the client program,

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and that doing so would result in the use of a token.

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13; 1272:13-1273:5; 1275:5-1276:8; 1281:24-1282:2; 1286:7-12;

Tr. 1273:9-1274:2.

However, Dr. Wicker also testified

Tr. 1241:7-

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Claim 1 of the '541 patent requires, among other things,
"receiving from the external source a token." Tr. Ex. 1.022. The
Court construed "token" as: "A file indicating whether the
transaction has been approved and access should be granted. A
token does not simply indicate that access should be granted, but
also contains a yes/no indicator exhibiting either approval or
rejection of the transaction." Final Jury Instructions at 29
(Docket No. 717). Claim 1 also requires, "based on the received
token, executing an installation process that generates at the
client a permission that is locked uniquely to the client and that
may be found by a later execution of the access checking process."
Tr. Ex. 1.022. The Court construed this element as: "Running an
installation program that creates a permission locally, which
permission is (1) locked uniquely to the client and (2) capable of
being found locally by a later execution of the access checking
process." Final Jury Instructions at 30.
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1330:14-1331:5.

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light of the Schull patent, it would have been obvious that

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permission could have been generated at the client:

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United States District Court
For the Northern District of California

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In fact, Dr. Wicker twice expressly said that, in

Q. So, the, what is your opinion with respect
to invalidity?
A. OK. Well, basically, I think it would have
been obvious to create a yes/no indication, and
then send it to the client and have the password
generated at the client. In fact, you heard Dr.
Schull say that just a few moments ago. There
are things that are done at the server in his
invention that can be done at the client."
Tr. 1275:21-1276:2.
Q. You mentioned a couple of times with
respect to the receiving the token limitation and
the based on limitation that it would have been
obvious. If you can walk us through in just a
little bit more detail the analysis that you did
for that particular conclusion.
A. Okay. With regard to obviousness, I noted
that, first off, Schull does the generation at
the server. So, the secret, as he called it, the
seed, is encrypted at the server and sent to the
client. Okay?
So it's like Adobe. It is done at the server.
But the claims require that it be done at the
client. So I had to ask myself:
"Would a person of skill with his or her
ability, knowledge in reading the Schull patent
have thought it was obvious to do it at the
client?"
Well, I note that Dr. Schull actually talked
about doing things at the client. And it would
have been obvious to transmit that yes/no and let
the client do the work instead of the server.

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Tr. 1281:9-1282:2.

Dr. Wicker further testified that one of

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ordinary skill in the art at the relevant time frame "would have
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known how to use the software functionality that was in the server
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to duplicate that functionality at a client.
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It is something that

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would have been well within their abilities."

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His testimony as to the obviousness of the token requirement went

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unrebutted at trial.

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Tr. 1330:13-1331:5.

In addition, the jury was presented with evidence of a motive

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to modify the prior art.

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have been an incentive to simplify matters at the server and push

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certain functions out to the client.

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Dr. Wicker testified that there would

Tr. 1330:19-24.

Finally, the Court is not persuaded that the prior art
teaches away from the missing limitations.

Both Professor Jon

United States District Court
For the Northern District of California

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Schull, the inventor of the Schull patent and an Adobe witness,

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and Dr. Wicker testified that, although in the Schull patent the

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permission is generated at the server and not at the client, it

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was merely a design choice and permission could just as easily

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have been generated at the client.

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Schull); 1282:18-1283:2 (Dr. Wicker).

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Tr. 1241:4-13 (Professor

For these reasons, the Court finds and concludes that there

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is sufficient evidence in the record to support the jury's

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determination of obviousness of the '541 patent's disputed claims.

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b.

Secondary Indicia of Non-Obviousness

Digital Reg also argues that the jury was precluded from

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considering secondary indicia of non-obviousness.

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Digital Reg argues that the Court's decision to exclude the dollar

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amount of its license agreement with RPX precluded the jury from

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considering that agreement as an indicator of non-obviousness.

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Again, the Court is not persuaded.

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In particular,

In deciding the parties' motions in limine, the Court found

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that the RPX agreement was relevant to the determination of a

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reasonable royalty, and on that basis denied Adobe's motion to
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exclude entirely any evidence of the RPX license.

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in Limine at 11-12 (Docket No. 632).

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citing circumstances surrounding the RPX agreement that were

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vastly different from those of other licensing agreements, found

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that evidence of the exact dollar amount of the license would

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"skew the jury's perception of a reasonable royalty, causing

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unfair prejudice to Adobe."

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Adobe's alternative motion and held that "Digital Reg may describe

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the circumstances of the RPX license, but not the actual amount."

United States District Court
For the Northern District of California

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Order on Mots.

Nevertheless, the Court,

Id. at 12.

Thus, the Court granted

Id.
Digital Reg argues that the very fact that it has executed a

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multi-million-dollar licensing agreement with RPX demonstrates

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that the '541 patent was not obvious.

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case.

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amount of the RPX agreement, it heard testimony describing the

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agreement, Tr. 325:13-327:4, 409:22-410:21, and specifically

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stating that it was "much, much higher" in value than the other

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license agreements in evidence.

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no reason to believe that the jury failed to consider this

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information, and provides no authority that would require

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disclosure to the jury of the precise dollar amount of the RPX

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agreement.

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agreement may be evidence of non-obviousness, the Federal Circuit

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has "often held [that] evidence of secondary considerations does

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not always overcome a strong prima facie showing of obviousness."

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Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1333

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(Fed. Cir. 2009) (quoting Asyst Techs, Inc. v. Emtrak, Inc., 544

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F.3d 1310, 1316 (Fed. Cir. 2008) (collecting cases)).

Digital Reg overstates the

Although the jury was not presented with the precise dollar

Tr. 327:1-4.

Digital Reg offers

Although evidence of a multi-million-dollar licensing

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Here, the

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Court finds that the jury was allowed appropriately to consider

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the RPX license.

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to support its finding of obviousness.

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entitled to JMOL.

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2.

Nonetheless, the jury heard evidence sufficient
Thus, Digital Reg is not

Indirect Infringement

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Digital Reg argues that it is entitled to JMOL of indirect

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infringement of the '541 patent because Adobe failed to present

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evidence sufficient for a finding of non-infringement, and

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therefore, no reasonable jury could have failed to find that the

United States District Court
For the Northern District of California

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patent was infringed.

Here again, the Court is not persuaded.

Digital Reg first argues that Adobe's Activation, Flash, and

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LiveCycle programs all contain the claimed token.

However, the

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jury heard Dr. Wicker's testimony that each of those products did

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not use the claimed token.

Tr. 715:23-716:1; 716:21-25; 723:24-

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724:2; 724:11-14; 730:1-7.

In addition, Digital Reg argues that

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the accused products generate permission at the client.

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Dr. Wicker's testimony contradicts this assertion.

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724:15-725:6; 730:15-20.

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permission generated at the server in the accused products is

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merely "regenerated" at the client, Dr. Wicker disputed that

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characterization.

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the accused products uniquely lock permission to the client.

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Again, Dr. Wicker's testimony was that permission was locked at

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the server, not at the client.

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light of Dr. Wicker's testimony, the Court is not persuaded that

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the evidence requires a finding of infringement.

Again,

Tr. 720:4-7;

Although Digital Reg argues that the

Tr. 720:5-16.

Digital Reg further argues that

Tr. 720:12-16; 724:23-725:1.

In

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Specifically with regard to LiveCycle, Digital Reg argues

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that its expert, Dr. Premkumar Devanbu, testified that LiveCycle's
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source code demonstrates that LiveCycle seeks permission from the

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client before requesting permission from an outside source, and

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that Dr. Devanbu's testimony was unrebutted.

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shows that both Dr. Wicker and Adobe employee Jonathan Herbach,

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testified that LiveCycle seeks permission from an outside source

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before checking for local permission.

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Wicker); Tr. 894:1-897:8, 902:3-7 (Mr. Herbach).

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testimony of Dr. Wicker and Mr. Herbach contradicting that of Dr.

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Devanbu, the Court is not persuaded that the evidence requires a

United States District Court
For the Northern District of California

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However, the record

Tr. 727:25-729:18 (Dr.
In light of the

finding of infringement.
For these reasons, JMOL of infringement is not appropriate,
and Digital Reg's motions are DENIED.

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B.

Adobe's Motions

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Adobe moves for JMOL on the grounds that the evidence

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presented at trial was legally insufficient to support a finding

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that its Activation and Flash products infringed the '541 patent.

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The jury was unable to reach a decision with regard to these

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products.

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Adobe argues (1) that Digital Reg failed to introduce

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evidence sufficient for a reasonable jury to conclude that

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Activation and Flash used a "token" as construed by the Court;

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(2) that Digital Reg failed to introduce evidence sufficient for a

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reasonable jury to conclude that Activation and Flash generated a

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"permission" locally at the client; and (3) that Digital Reg

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failed to introduce evidence sufficient for a reasonable jury to

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conclude that Adobe intended to infringe the '541 patent.

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The Court is not persuaded.

For each of the arguments that

Adobe advances, Digital Reg cites to evidence in the record that
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would be sufficient to support a finding of infringement.

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Consequently, Adobe's motions are DENIED.

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II.

Digital Reg's Alternative Motion for New Trial
In the alternative, Digital Reg asks the Court to grant a new

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trial with regard to the '541 patent as to both invalidity and

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infringement.

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A.

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A new trial may be granted if the verdict is not supported by

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Legal Standard

the evidence.

There is no easily articulated formula for passing

United States District Court
For the Northern District of California

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on such motions.

Perhaps the best that can be said is that the

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Court should grant the motion "[i]f, having given full respect to

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the jury's findings, the judge on the entire evidence is left with

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the definite and firm conviction that a mistake has been

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committed."

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F.2d 1365, 1371-72 (9th Cir. 1987) (quoting 11 Wright & Miller,

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Fed. Prac. & Proc. § 2806, at 48-49).

Landes Constr. Co., Inc. v. Royal Bank of Canada, 833

The Ninth Circuit has found that the existence of substantial

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evidence does not prevent the court from granting a new trial if

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the verdict is against the clear weight of the evidence.

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833 F.2d at 1371.

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the credibility of witnesses, and need not view the evidence from

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the perspective most favorable to the prevailing party."

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Therefore, the standard for evaluating the sufficiency of the

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evidence is less stringent than that governing Rule 50(b) motions

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for judgment as a matter of law after the verdict.

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//

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//

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//

Landes,

"The judge can weigh the evidence and assess

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Id.

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B.

Analysis
1.

Validity

Digital Reg argues that it is entitled to a new trial on the

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question of the obviousness of the '541 patent because (1) the

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weight of the evidence at trial was contrary to the jury's finding

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of obviousness; and (2) the Court erred in excluding the amount of

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the RPX license from trial, thus depriving the jury of critical

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evidence of non-obviousness.

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The Court is not persuaded.

As set forth in Part I.B.1.a, the jury's finding that the

United States District Court
For the Northern District of California

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asserted claims of the '541 patent were obvious was not contrary

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to the clear weight of the evidence.

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Part I.B.1.b, the jury was not precluded from considering the RPX

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agreement; rather, it merely was precluded from considering the

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specific dollar value of the RPX agreement, while still being

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informed that its value was "much, much higher" than that of other

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licensing agreements.

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the proposition that excluding the dollar value alone, while

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admitting other evidence about the RPX agreement, constitutes

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grounds for a new trial.

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2.

In addition, as set forth in

Digital Reg has provided no authority for

Infringement

Digital Reg argues that it is entitled to a new trial on the

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issue of infringement of the '541 patent because (1) the weight of

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the evidence at the first trial is contrary to the jury's finding

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that Adobe LiveCycle did not infringe the patent's disputed

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claims; and (2) the jury failed to return an infringement verdict

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with regard to Adobe Activation and Adobe Flash.

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Here again, the Court is not persuaded that the jury
committed a mistake by finding that LiveCycle did not infringe the
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'541 patent.

As demonstrated in Part I.A.2, there was sufficient

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evidence for the jury to reach that decision.

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order a new trial because the jury failed to reach a decision on

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the question of whether Activation and Flash infringe the '541

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patent.

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invalid, which is "a complete defense to infringement."

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Sys. Corp. v. Tom Lalor & Bumper Boy, Inc., 709 F.3d 1124, 1132

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(Fed. Cir. 2013) (quoting Typeright Keyboard Corp. v. Microsoft

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Corp., 374 F.3d 1151, 1157 (Fed. Cir. 2004)).

Nor need the Court

The jury found the asserted claims of those patents to be
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Further, the Court

United States District Court
For the Northern District of California

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finds above that Adobe did not infringe these claims as a matter

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of law.

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For these reasons, Digital Reg's alternative motion for a new
trial is DENIED.
CONCLUSION

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For the reasons set forth above, Digital Reg's motions for

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judgment as a matter of law and for a new trial (Docket Nos. 712,

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743) are DENIED.

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matter of law (Docket Nos. 710, 742) are DENIED.

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enter separately.

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In addition, Adobe's motions for judgment as a
Judgment will

Adobe may recover its costs from Digital Reg.

IT IS SO ORDERED.
Dated:

November 17, 2014
CLAUDIA WILKEN
United States District Judge

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