Rosebud LMS Inc. v. Adobe Systems Incorporated

Filing 97

MEMORANDUM. Signed by Judge Sue L. Robinson on 2/5/2015. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
)
)
)
)
Plaintiff,
)
)
v.
)
ADOBE SYSTEMS INCORPORATED, )
)
)
Defendant.
)
ROSEBUD LMS, INC. d/b/a
ROSEBUD PLM,

Civ. No. 14-194-SLR

MEMORANDUM
At Wilmington this.5irday of February, 2015, having heard argument on, and
having reviewed the papers submitted in connection with, Adobe Systems
lncorporated's ("Adobe") motion for summary judgment of no remedies (D.I. 65); the
court issues its decision based on the following reasoning:
1. Background. On February 13, 2014, plaintiff Rosebud LMS Inc. d/b/a
Rosebud Pim ("Rosebud") filed this action ("Rosebud 111) against Adobe alleging that
Adobe's Collaborative Live feature in Adobe Acrobat infringes certain method claims of
U.S. Patent No. 8,578,280 ("the '280 patent"). (D.I. 1) After Adobe moved to dismiss,
Rosebud filed a first amended complaint ("FAC") on April 7, 2014. Adobe answered the
FAC and counterclaimed on April 28, 2014. Rosebud answered the counterclaims on
May 22, 2014. The court has jurisdiction pursuant to 28 U.S.C. §§ 1331and1338(a).
2. Rosebud is a Delaware corporation with its principal place of business in New
York City, New York. Adobe is a Delaware corporation with its principal place of

business in San Jose, California. This lawsuit is the third in a series of lawsuits that
Rosebud has filed against Adobe beginning in 2010. The '280 patent is a continuation
of the patent at issue in Rosebud 11, 1 U.S. Patent 8,046,699 ("the '699 patent"). The
'699 patent from Rosebud II was, in turn, a continuation of the patent at issue in
Rosebud 1, 2 U.S. Patent 7,454,760 ("the '760 patent").
3. Standard. "The court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the burden
of demonstrating the absence of a genuine issue of material fact. Matsushita E/ec.
Indus. Co. v. Zenith Radio Corp., 415 U.S. 574, 586 n.10 (1986). A party asserting that
a fact cannot be-or, alternatively, is-genuinely disputed must support the assertion
either by citing to "particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations, stipulations
(including those made for the purposes of the motions only), admissions, interrogatory
answers, or other materials,'' or by "showing that the materials cited do not establish the
absence or presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1 )(A) & (B). If the
moving party has carried its burden, the nonmovant must then "come forward with
specific facts showing that there is a genuine issue for trial." Matsushita, 415 U.S. at
587 (internal quotation marks omitted). The court will "draw all reasonable inferences in

1

Civ. No. 12-1141 was filed on September 17, 2012 and dismissed with prejudice by
stipulation on February 28, 2014.
2 Civ. No. 10-404 was filed on May 14, 2010, and was dismissed on November 24, 2010
by stipulation after Adobe made its source code available to demonstrate that it did not
infringe the '760 patent.

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favor of the nonmoving party, and it may not make credibility determinations or weigh
the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).
4. To defeat a motion for summary judgment, the non-moving party must "do
more than simply show that there is some metaphysical doubt as to the material facts."
Matsushita, 475 U.S. at 586-87; see also Podohnik v. U.S. Postal Service, 409 F.3d
584, 594 (3d Cir. 2005) (stating party opposing summary judgment "must present more
than just bare assertions, conclusory allegations or suspicions to show the existence of
a genuine issue") (internal quotation marks omitted). Although the "mere existence of
some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment," a factual dispute is genuine where "the
evidence is such that a reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 411 U.S. 242, 247-48 (1986). "If the evidence is merely
colorable, or is not significantly probative, summary judgment may be granted." Id. at
249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 411 U.S. 317, 322
(1986) (stating entry of summary judgment is mandated "against a party who fails to
make a showing sufficient to establish the existence of an element essential to that
party's case, and on which that party will bear the burden of proof at trial").
5. Analysis. The parties do not dispute that the accused Collaborate Live
feature of Adobe's product was discontinued and could not have been used after
January 2013. (D.I. 66 at 2-3) As the '280 patent issued on November 5, 2013,
Rosebud cannot recover post-issuance damages. See Welker Bearing Co. v. PHO,
Inc., 550 F.3d 1090, 1095 (Fed. Cir. 2008) (citing Hoover Group, Inc. v. Custom
Meta/craft, Inc., 66 F.3d 299, 304 (Fed. Cir. 1995), for the general proposition that a

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patentee may "obtain damages only for acts of infringement after the issuance of the []
patent .... "). Therefore, Rosebud seeks to recover provisional remedies under 35
U.S.C. § 154(d), based on the publication of the '280 patent application 3 on December
29, 2011.
6. Section 154(d) provides for provisional rights:
(1) In general.--ln addition to other rights provided by this section,
a patent shall include the right to obtain a reasonable royalty from any
person who, during the period beginning on the date of publication of the
application for such patent under section 122(b), ... , and ending on the
date the patent is issued-(A)(i) makes, uses, offers for sale, or sells in the United States
the invention as claimed in the published patent application or imports
such an invention into the United States; ...
. . . ; and
(B) had actual notice of the published patent application ....
(2) Right based on substantially identical inventions.-The right
under paragraph (1) to obtain a reasonable royalty shall not be available
under this subsection unless the invention as claimed in the patent is
substantially identical to the invention as claimed in the published patent
application.
35 U.S.C. § 154 (emphasis added). 4 The legislative history reflects that
[t]he requirement of actual notice is critical. The mere fact that the
published application is included in a commercial database where it might
be found is insufficient. The published applicant must give actual notice of
the published application to the accused infringer and explain what acts
are regarded as giving rise to provisional rights.
(D.I. 69, ex. 14, H. Rep. No. 106-287, at 55, 106th Cong., 1st Sess. (1999)
(accompanying H.R.1907) ("House Report") (emphasis added)).

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The '280 patent resulted from U.S. Patent Application No. 13/229,371, which was
published on December 29, 2011 as U.S. Patent Application Pub. No. 2011/0320936.
For simplicity, the court refers to the published patent application as "the '280 patent
application."
4 The parties do not dispute that the claims of the published patent are "substantially
identical inventions."

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7. Statutory interpretation begins with the plain language of the statute. See
Jimenez v. Quarterman, 555 U.S. 113, 118 (2009) ("As with any question of statutory

interpretation, our analysis begins with the plain language of the statute."). The Third
Circuit has instructed courts to consider '"not only the particular statutory language at
issue, but also the structure of the section in which the key language is found, the
design of the statute as a whole and its object."' Register v. PNC Financial Servs.
Group, Inc., 477 F.3d 56, 67 (3d Cir. 2007) (quoting A/aka v. Attorney General, 456 F.3d

88, 104 (3d Cir. 2006)). In this regard, '"[s]tatutes should be interpreted to avoid
untenable distinctions and unreasonable results whenever possible."' Id. (quoting
American Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982)).

8. Pursuant to the plain language of§ 154(d), the alleged infringer must have
"actual notice" of the "published patent application." Section 154(d) imposes no
requirement that the "actual notice" be provided by an affirmative act of the patent
applicant. Nor does the statute require an explanation of the infringing conduct. See
Arendi Holding Ltd. v. Microsoft Corp., Civ. No. 09-119, 2010 WL 1050177, at *7 (D.

Del. Mar. 22, 2010) report and recommendation adopted, Civ. No. 09-119, 2010
WL 1485314 (D. Del. Apr. 12, 2010). It is well recognized that "actual notice" is distinct
from "constructive notice."5 Because the legislative history characterized the

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"Actual notice" is defined as notice expressly and actually given while
"constructive notice" is defined as information or knowledge of a fact
imputed by law to a person, although he or she may not actually have it,
because he or she could have discovered the fact by proper diligence, and
his or her situation was such as to cast upon him or her the duty of
inquiring into it.

58 Am. Jur. 2d Notice§ 4 (2d ed. 2015). For instance, compliance with the marking
statute requires consistently marking substantially all of the patented products in order

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requirement of actual notice as "critical," "it is not enough that the alleged infringer had
information from which it could or should have become aware of the existence of the
published patent application." See Arendi at *9.
9. In the case at bar, Rosebud contends that the "actual notice" requirement is
met based on the following evidence: ( 1) Adobe had all of the information contained in
the '280 patent application by virtue of the information contained in the '760 application;
(2) one line of Adobe's source code for the accused collaborative live feature makes a
reference to a "Rosebud sample;" 6 (3) a few Adobe-produced emails discuss an
unidentified trial product of "Rosebud" and the '760 patent; and (4) "standard practice for
patent litigators [is] to search for patents and applications related to the asserted
patent," referencing the '760 patent litigation. (D.I. 77 at 7-9)
10. Clearly, none of Rosebud's evidence identifies the '280 application by name.
At best, it is evidence of constructive notice which, consistent with the statutory
language, the case law, and the legislative history, 7 does not constitute "actual notice"
for purposes of claiming provisional remedies. Moreover, the court rejects any
inference that Adobe had an affirmative duty to search for patent applications published
by Rosebud because of the parties' litigation history. 8

to provide constructive notice to the public. Am. Med. Sys., Inc. v. Med. Eng'g Corp., 6
F.3d 1523, 1537-38 (Fed. Cir. 1993).
6 Reading "lots of this stolen from http://support.microsoft.com/support ... ; Rosebud
sample." (D.I. 77 at 7)
7
Notably, even a specific mention of the '280 patent application in a commercial
database where it might be found would be deemed insufficient notice by the authors of
the statute.
8 To find that the patentee has no affirmative duty to provide actual notice to an alleged
infringer, but that the alleged infringer has an affirmative duty to search for patent
applications, would turn the legislation on its head.

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11. In sum, § 154(d) provides an extraordinary remedy to a patentee - collecting
damages before its patent issues. The conclusion reached at bar - that actual, not
constructive, notice is required - is consistent with the notion that such an extraordinary
remedy provided therein should not be awarded unless the alleged infringer actually
knows about the patent application and engages in the infringing conduct with such
knowledge.
12. Conclusion. Rosebud acknowledges that it did not provide actual notice of
the '280 patent application to Adobe. Because its evidence of constructive notice is
insufficient under§ 154(d) as a matter of law, Adobe's motion for summary judgment of
no remedies is granted. An appropriate order shall issue.

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