Leader Technologies Inc. v. Facebook Inc.

Filing 660

REPLY BRIEF re 628 MOTION for Judgment as a Matter of Law of No Direct Infringement filed by Facebook Inc.(a Delaware corporation). (Caponi, Steven)

IN THE UNITED STATES COURT
FOR THE DISTRICT OF DELAWARE
LEADER TECHNOLOGIES, INC.,
a Delaware corporation,
Plaintiff and Counterdefendant,
v.
FACEBOOK, INC.,
a Delaware corporation,
Defendant and Counterclaimant.

)
) CIVIL ACTION
)
)
) No. 1:08-cv-00862-LPS
)
)
)
)
)
)
)
)

REPLY MEMORANDUM IN SUPPORT OF FACEBOOK, INC.’S
RENEWED MOTION FOR JUDGMENT AS A MATTER
OF LAW (JMOL) OF NO DIRECT INFRINGEMENT
[MOTION NO. 1 OF 4]
Steven L. Caponi (DE Bar #3484)
BLANK ROME LLP
1201 N. Market Street, Suite 800
Wilmington, DE 19801
302-425-6400
Fax: [phone]
Attorneys for Defendant and
Counterclaimant Facebook, Inc.
OF COUNSEL:
Michael G. Rhodes (pro hac vice)
Heidi L. Keefe (pro hac vice)
Mark R. Weinstein (pro hac vice)
Jeffrey Norberg (pro hac vice)
Elizabeth L. Stameshkin (pro hac vice)
COOLEY LLP
3000 El Camino Real
5 Palo Alto Square, 4th Floor
Palo Alto, CA 94306
Dated: September 27, 2010

TABLE OF CONTENTS
Page No.
I.

INTRODUCTION ............................................................................................................. 1

II.

ARGUMENT..................................................................................................................... 1
A.

JMOL of Non-Infringement Should be Entered as to Claims 9, 11 and 16........... 1
1.

Leader’s Attempt to Revive its Abandoned “Wherein Means
When” Argument Should Be Rejected – Again ........................................ 2

2.

The “Creating Data” Step Also Mandates User Participation ................... 4

3.

Fantasy Sports Properties Is Inapplicable .................................................. 5

B.
C.

III.

JMOL of No Infringement Must be Entered as to the Non-Method Claims ......... 6
JMOL of Non-Infringement Must be Entered as to All Claims for Lack of
Evidence................................................................................................................. 9

CONCLUSION................................................................................................................ 10

-i-

TABLE OF AUTHORITIES
Page No.
CASES
BMC Resources, Inc. v. Paymentech, L.P.,
498 F.3d 1373 (Fed. Cir. 2007)..................................................................................................6
Desenberg v. Google, Inc.,
No. 2010-1212, 2010 WL 3452493 (Fed. Cir. August 31, 2010)..........................................3, 4
Fantasy Sports Properties, Inc. v. Sportsline, Inc.,
287 F.3d 1108 (Fed. Cir. 2002)..............................................................................................5, 6
Fire King Int’l LLC v. Tidel Eng’g, L.P.,
613 F. Supp. 2d 836 (N.D. Tex. 2009) ......................................................................................6
Golden Hour Data Sys., Inc. v. emsCharts, Inc.,
Nos. 2009-1306, 2009-1396, ___ F.3d ____, 2010 WL 3133539 (Fed. Cir. Aug. 9,
2010) ................................................................................................................................ passim
Helmsderfer v. Bobrick Washroom Equip., Inc.,
527 F.3d 1379 (Fed. Cir. 2008)..................................................................................................3
Kinnel v. Mid-Atl. Mausoleums, Inc.,
850 F.2d 958 (3d Cir. 1988).......................................................................................................8
Muniauction, Inc. v. Thomson Corp.,
532 F.3d 1318 (Fed. Cir. 2008)..................................................................................................6
Neely v. Club Med Mgmt. Servs., Inc.,
63 F.3d 166 (3d Cir. 1995).........................................................................................................8
OTHER AUTHORITIES
Federal Rules of Civil Procedure 50................................................................................................9
Federal Rule of Civil Procedure Rule 12(b)(6)................................................................................4
Federal Circuit, Rules of Practice, Rule 32.1(a)(ii) .........................................................................3

-ii-

I.

INTRODUCTION
Leader’s arguments are foreclosed by the plain language of the claims and contrary to the

evidence elicited at trial. The plain language of claim 9 includes a step wherein “the user
employs at least one of the application and the data from the second environment;” and the nonmethod claims asserted by Leader include a substantially similar step.

In order to show

infringement, therefore, Leader bore the burden of proving that the user, not Facebook,
performed this step and did so under the control or direction of Facebook. Leader did not show
either, nor could it.

Leader argues that its reliance on user actions was only part of an

“alternative” theory of joint infringement, but the trial record clearly demonstrates that Leader
relied on user actions in every one of its infringement theories as to all asserted claims. For
those reasons, Facebook’s motion should be granted.
II.

ARGUMENT
A.

JMOL of Non-Infringement Should be Entered as to Claims 9, 11 and 16

Leader argues that its failed joint infringement claim was merely an “alternative” theory
whose rejection by the jury has no consequence to its case. Leader posits that “Facebook alone
directly infringed all of the asserted method claims” because “Facebook’s source code performs
every step of every asserted method claim.” D.I. 642 at 4-5. Leader’s argument ignores and
cannot be reconciled with the plain language of claim 9, which requires at least two elements to
be performed by “the user.” See D.I. 636, Ex. 4, ’761 patent, claim 9 (“wherein the user
employs at least one of the application and the data from the second environment,” and “creating
data within a user environment of a web-based computing platform via user interaction with the
user environment by a user using an application,”) (emphasis added).

1

Because claim 9 can only be performed through a combination of actions by Facebook
and its users, as a matter of law, Facebook can not be liable for infringement because Leader
failed to prove that Facebook exercised “control or direction” over its users. See Golden Hour
Data Sys., Inc. v. emsCharts, Inc., Nos. 2009-1306, 2009-1396, ___ F.3d ____, 2010 WL
3133539, at *11 (Fed. Cir. Aug. 9, 2010). Judgment as a matter of law of non-infringement as to
claims 9, 11 and 16 must therefore be entered in accordance with the jury’s findings.
1.

Leader’s Attempt to Revive its Abandoned “Wherein Means When”
Argument Should Be Rejected – Again

As to the final element of claim 9, “wherein the user employs at least one of the
application and the data from the second environment,” Leader provides no explanation as to
how “Facebook alone,” D.I. 642 at 5, could possibly perform this claim step. Nor could it. The
claim language itself could not be clearer that “the user” employs the application or data. To
attempt to avoid the clear requirement of “user” action in claim 9, Leader reverts to the frivolous
argument that it made and abandoned at trial – that “wherein” somehow means “when”:
The “wherein” clause [of claim 9] establishes a condition for when the
back-end components “dynamically updat[e] the stored metadata .... ”
PTX 1, ’761 Patent at col. 21:54. Dr. Vigna pointed to specific Facebook
source code that performs the dynamically updating step and satisfies the
claim language. See Tr. 688:24-690:6.
D.I. 642 at 7 (emphasis added). “Wherein” does not mean “when.”

The Court construed

“wherein” to mean “in which.” (D.I. 601, Jury Instruction 3.4, at 24.)
As the Court will recall, Facebook urged the Court to construe “wherein” because Leader
argued throughout trial that “wherein” meant “when.” (D.I. 596 at 4-6); see also Supplemental
Declaration of Elizabeth Stameshkin in Support of Reply Memorandum in Support Facebook’s
Inc.’s Renewed Motion for Judgment as a Matter of Law (“Stameshkin Supp. Decl.”), Ex. A at
1613:24-1618:12. Facebook argued that the term “wherein” should be construed as “in which,”

2

and should specifically exclude “when” to preclude Leader from continuing to make an
inappropriate claim construction argument to the jury. Id. In response to Facebook’s concerns,
and prior to construing “wherein,” the Court specifically asked Leader:
“is it enough for me to construe wherein as in which and not go the extra
mile and say not when?”
Id. Ex. A at 1634:22-1635:2. Leader’s counsel represented to the Court that such a clarification
was unnecessary, and reassured the Court that:
“I’m not going to argue when. I’m arguing which. That’s been our
position throughout this case. It is in which.”
Id. at 1635:24-1636:3 (emphasis added). Despite this unequivocal representation, Leader is
again arguing that “wherein” means “when.” Leader’s attempt to rewrite its claims to say
something they do not should be rejected – again. See Helmsderfer v. Bobrick Washroom
Equip., Inc., 527 F.3d 1379, 1383 (Fed. Cir. 2008) (“Courts cannot rewrite claim language.”).
Leader has cited no case in which any court has construed “wherein” in such a strained
manner. In fact, in Desenberg v. Google, Inc., No. 2010-1212, 2010 WL 3452493, at *2 (Fed.
Cir. August 31, 2010),1 the Federal Circuit recently affirmed the dismissal as a matter of law of a
patent infringement claim against Google based on a “wherein” clause that, like the one in claim
9, required action by a third party. The plaintiff argued that the “wherein” clause was not a
separate claim step that had to be performed by the user. The court rejected this argument,
noting that “[t]he district court treated the [patent’s] ‘wherein’ clauses as a part of the claimed
method, and concluded that Google could not be a direct infringer because Google did not
1

Desenberg was not designated for publication but may be cited as persuasive authority. See
United States Court of Appeals for the Federal Circuit, Rules of Practice, Rule 32.1(a)(ii) (parties
may cite unpublished Federal Circuit decisions issued after January 1, 2007) (available at
http://www.cafc.uscourts.gov). The court did not publish Desenberg because it determined that
the decision did not add “significantly to the body of law,” id. (comments to Rule 32.1),
presumably because the joint infringement precedents it applied were already well-established.
3

perform, or direct or control the performance of, all steps of the claimed method.” Desenberg,
2010 WL 3452493, at *2.

“Precedent is in accord with the district court’s analysis. The

dismissal under Rule 12(b)(6) is affirmed.” Id. at *3.
Because Facebook itself does not perform the step of the user employing the application
or data, Leader had to prove that Facebook controlled or directed Facebook’s users or employees
in performing that action. See Golden Hour, ___ F.3d at ____, 2010 WL 3133539, at *11.
Because the jury found that Leader failed to do so at trial, judgment as a matter of law in favor of
Facebook must be entered. Id.
2.

The “Creating Data” Step Also Mandates User Participation

Leader’s argument as to the other element of claim 9 that requires user participation,
“creating data within a user environment of a web-based computing platform via user interaction
with the user environment by a user using an application,” is similarly unavailing. Leader’s
argument that Facebook itself performs this claim step not only ignores the plain language of the
claim, but invents a theory of infringement never presented at trial.
The language of this claim element is abundantly clear – the user, through “user
interaction … using an application,” creates the data in the user environment. No data can be
created, nor this step performed, without user interaction. This interpretation is confirmed by the
specification, whose description of this step leaves no doubt that the user – not the claimed
underlying system or an application – performs this step:
After login, the user can perform data operations (e.g., create and
manipulate) on a data 106 in any number of ways, including, but not limited
to, viewing, editing, copying, moving and deleting the data. Such data
operations can be performed using at least one application 108. For example,
where the data 106 is text data, a text editing or word processing application
can be employed.
D.I. 636, Ex. 4, ’761 patent, PTX 1, at Col. 6:33-39 (emphasis added); see also id. at Col. 7:31

4

(“At 204 [of Fig. 2], the user performs a data operation.”) (emphasis added). Thus, while the
specification and claim language teach that the user will employ a software application (such as
WordPerfect) to create data, it is nonetheless the user who must perform the creation.
Even if the claim could be construed not to require an action by a user, Leader’s
argument would still fail because Leader’s infringement theory for this element rested on action
by the user. Leader’s only evidence regarding this claim element came from the following trial
testimony from Dr. Vigna:
Q:

On the first claim element, creating data within a user environment.
Do you see that?

A:

Yes.

Q:

Can you describe generally what that is referring to?

A:

So this is describing a method for creating data, you know, sort of user
environment by interacting with the platform using an application and
the data that is exchanged as files and documents.

Q:

And does Facebook inform its users how to do this action?

A:

Yeah. The Facebook provides when the users go to the website, for
example, and perform the task of uploading a note, document or
uploading a file in a form of a picture, they go through the steps of this
method to achieve the goal of creating this data.

D.I. 637, Ex. 1 at 680:13-681:7 (emphasis added). Dr. Vigna went on to describe the process of
how the user goes about uploading a photo to Facebook as another example of the user creating
data. See id. at 680:8-23. This testimony was Leader’s entire presentation on the “creating data”
element of claim 9, not merely an “alternative joint-infringement theory,” as Leader now claims.
See D.I. 642 at 6-7. Dr. Vigna did not address this particular claim element at any other point in
his testimony, and the generic testimony Leader cites in its opposition was not linked or directed
in any way to this claim element. See id.
3.

Fantasy Sports Properties Is Inapplicable

Leader’s opposition relies on Fantasy Sports Properties, Inc. v. Sportsline, Inc., 287 F.3d
5

1108 (Fed. Cir. 2002), but its reliance is misplaced. The claims at issue in Fantasy Sports
covered “a computer” with various “means for” simulating football games based on statistics of
real players. Id. at 1111-12. The Federal Circuit interpreted the claims as requiring only the
presence of software capable of infringing when used, but not actual action by any third party.
Id. at 1119. The court reasoned that the defendant could, by itself, infringe those claims because
“there is no ‘user participation’ or ‘control’ limitation in the claims of the [patent-in-suit]
requiring that an accused fantasy football game be operated by any specific entity.” Id. This is
not the case with claim 9, which plainly requires a user to: (1) employ an application and data
from the second environment, and (2) create data by using an application.
Fantasy Sports was decided years before the Federal Circuit’s decisions in BMC
Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) and Muniauction, Inc. v.
Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). None of the Federal Circuit’s decisions relating
to “control or direction” have even cited Fantasy Sports, let alone relied on it to inform the
standards under which joint infringement liability may attach. See also Fire King Int’l LLC v.
Tidel Eng’g, L.P., 613 F. Supp. 2d 836, 843 (N.D. Tex. 2009) (granting summary judgment of
non-infringement, distinguishing Fantasy Sports in light of its “limited holding”). Fantasy
Sports has nothing to do with joint infringement and provides no basis for denying Facebook’s
motion for judgment as a matter of law.
B.

JMOL of No Infringement Must be Entered as to the Non-Method Claims

The “control or direction” standard applies not just to claim 9, 11 and 16, but also to the
system and computer readable medium claims asserted at trial (i.e. claims 1, 4, 7, 21, 23, 25, 31
and 32). Golden Hour establishes that when, as here, the alleged infringement of system claims
can be accomplished only through joint infringement, i.e. through the combined actions of the
defendant and a third party, the plaintiff must show “control or direction” over the actions of the
6

third party. ___ F.3d at ____, 2010 WL 3133529, at *11 (“Such a verdict [of infringement] can
only be sustained if there was control or direction of [the third party] by [the direct infringer].
Under these circumstances, JMOL was properly granted as to the systems claims as well as to
the process claims.”).
Leader’s attempt to distinguish Golden Hour rests upon its unfounded assertion that joint
infringement was merely the “alternative” theory it presented at trial. But Leader’s attempt to
reinvent its trial theories cannot change the fact that the claims themselves dictated that Leader
proceed under a joint infringement theory. All of the non-method claims asserted at trial include
an explicit step requiring that “the user” access or employ data in the second context or
workspace. See D.I. 636, Ex. 4, ’761 patent, PTX 1, at claim 1 (“the user accesses the data from
the second context”); id. at claim 21 (“the user employs the application and data from the second
user workspace”); id. at claim 23 (“the user accesses the data from the second user workspace”).
Facebook never argued that Golden Hour requires that “infringement of product claims must be
proven in all cases under a joint infringement theory,” D.I. 642 at 9, but rather, that infringement
of these claims must be proven under a joint infringement theory. As with claim 9 discussed
above, Leader can provide no explanation as to how Facebook’s source code could perform steps
that the claims themselves clearly assign to “the user.”
Furthermore, for each of the non-method claims, Leader’s expert relied on actions by the
user to assert infringement. See, e.g., D.I. 637, Ex. 1 at 658:21-666:8 (claim 1). In arguing that
it presented a theory of solo infringement by Facebook alone, Leader cites only the one- or twosentence conclusions by its expert. D.I. 642 at 4-5 (citing, e.g., D.I. 637, Ex. 1 at 667:2-3 for
claim 1); D.I. 642 at 10 (citing, e.g., D.I. 637, Ex. 1 at 666:17-667:7 for claim 1). But barebones
conclusions cannot change the plain language of the claims and certainly cannot support a

7

finding of infringement.

Moreover, the foundation for each of Leader’s infringement

conclusions rested on user actions.

For example, on direct examination, Leader’s counsel

“walk[ed]” Leader’s expert through his infringement theory of claim 1. D.I. 637, Ex. 1 at 658:78. At each step of that walk, Dr. Vigna relied on user action to support his theory: “the user
uploads a profile feature,” “the user, John Vineyard, goes to visit the profile of Mary Smith,”
“what the user is going to do is going to write something on the wall,” “when the share button is
pressed, there is tracking information in the form of a story,” “when this happens, the user access
the data from the second context.” D.I. 637, Ex. 1 at 659:12-662:15; see also id. at 663:7-13
(conclusion based on screen shots showing user actions); id. at 664:10-666:20. For each of the
other non-method claims, Leader’s expert relied on the same or similar user actions. See, e.g.,
id. at 723:11-724:8 (claim 21, “first element”); id. at 729:22-730:19 (claim 21, “third element”);
id. at 731:8-732:7 (claim 21, “fourth element”); id. at 745:2-747:5 (claim 23, “first element”); id.
at 748:7-18 (claim 23, “second element”). Leader also argues that the Court lacks authority to
extend the jury’s finding on claims 9, 11 and 16 to the non-method claims, but this argument is
without merit. The cases Leader cites in its opposition stand for the unremarkable proposition
that a district court cannot apply a jury’s finding on one issue to a different issue when the two
issues are substantively different. See Neely v. Club Med Mgmt. Servs., Inc., 63 F.3d 166, 20103 (3d Cir. 1995) (refusing to apply jury’s finding of contributory fault on one claim to another
claim because of the differences in factual allegations and theories of liability); Kinnel v. MidAtl. Mausoleums, Inc., 850 F.2d 958, 964-66 (3d Cir. 1988) (refusing to extend jury’s finding of
liability of one defendant to another defendant). In contrast, the jury’s finding of no “control or
direction” with respect to the method claims is identical to that which must be determined for the
non-method claims of the ’761 patent. All asserted claims share the same requirement that the

8

user access or employ data in the second context, user environment or user workspace. The
Court should therefore, based on the jury’s finding as to the method claims, enter judgment of no
direct infringement as a matter of law for the non-method claims.
C.

JMOL of Non-Infringement Must be Entered as to All Claims for Lack of
Evidence

JMOL of non-infringement should be entered as to all claims because Leader failed to
present evidence from which a reasonable jury could find in its favor. See Fed. R. Civ. P. 50.
Leader attempts at the end of its opposition to argue that it presented sufficient evidence of
“control or direction” of Facebook employees and end users, but clearly it did not as the jury’s
verdict confirms. As explained in Facebook’s opening brief, Leader presented no evidence that
Facebook controls or direct its users beyond terms of use which themselves expressly disclaim
that Facebook has any ability to control actions of its users. D.I. 632 at 8-9.
Leader also presented no evidence that Facebook controls or directs the actions of its
employees with respect to any step of any asserted claim. The jury form makes clear that Leader
had the burden of showing that “[w]ith respect to its infringement claims” Facebook directs or
controls “the accused actions” of its employees. D.I. 610 at 2. Leader’s recitation of the general
law of agency does not establish that Facebook employees performed any action required by the
claims, nor that performing such actions fell within the scope of any employee’s duties.
Leader took the depositions of countless Facebook employees, including its CEO and ten
Facebook engineers, yet the only argument it can make in its opposition to argue “control or
direction” is the assertion that “Facebook’s employees inherently have a contractual relationship
and indeed are agents of the company,” D.I. 642 at 11 (emphasis added), with no citation to
evidence. Leader failed to provide evidence of even a single employment contract, let alone
explain how any such contract would have required Facebook employees to perform the accused

9

claim steps through use of the Facebook website. Nor did Leader present any evidence relating
to the existence of any agency relationship, let alone its scope. In light of Leader’s complete
failure of proof at trial, the Court should grant judgment as a matter of law with respect to
Leader’s claims for direct infringement as to all asserted claims.
III.

CONCLUSION
For the reasons stated above, Facebook respectfully requests that this Court grant

judgment as a matter of law of no direct infringement as to all asserted claims of the ’761 patent.

Dated: September 27, 2010

OF COUNSEL:
Michael G. Rhodes (pro hac vice)
Heidi L. Keefe (pro hac vice)
Mark R. Weinstein (pro hac vice)
Jeffrey Norberg (pro hac vice)
Elizabeth L. Stameshkin (pro hac vice)
COOLEY LLP
3000 El Camino Real
5 Palo Alto Square, 4th Floor
Palo Alto, CA 94306

By: /s/ Steven L. Caponi
Steven L. Caponi (DE Bar #3484)
BLANK ROME LLP
1201 N. Market Street, Suite 800
Wilmington, DE 19801
302-425-6400
Fax: [phone]
Attorneys for Defendant-Counterclaimant
Facebook, Inc.

10