Sonos Inc. v. D&M Holdings Inc. et al

Filing 406

MEMORANDUM ORDER: The Motions for Summary Judgment (D.I. 298 , 301 ) are DENIED. Signed by Judge Richard G. Andrews on 8/24/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

SONOS, INC.,
Plaintiff,
V.

Civil Action No. 14-1330-RGA
D&M HOLDINGS INC. d/b/a THE D+M
GROUP, D&M HOLDINGS U.S. INC., and
DENON ELECTRONICS (USA), LLC,
Defendants.

MEMORANDUM ORDER
Presently before the Court are Defendants' Motion for Summary Judgment of No Direct
Infringement (D.I. 298) and related briefing (D.I. 298, 350, 365) and Defendants' Motion for
Summary Judgment of No Indirect Infringement (D.I. 301) and related briefing (D.I. 301, 351,
368). For the reasons that follow, IT IS HEREBY ORDERED THAT Defendants' Motions for
Summary Judgment (D.I. 298, 301) are DENIED.
"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 oflaw." FED.
R. Crv. P. 56(a). 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, 550 U.S. 372, 380 (2007); Wishkin v.

Potter, 476 F.3d 180, 184 (3d Cir. 2007). A dispute is "genuine" only ifthe evidence is such that
a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby,
477 U.S. 242, 247--49 (1986).

Defendants move for summary judgment of no direct infringement based on the sale or
importation of the accused products. (D.I. 298 at 7). Defendants' argument revolves around
their interpretation of the phrase "configured to," which appears in many of the apparatus and
method claims of the asserted patents, as requiring modification, assembly, and programming by
the end user in order to infringe. (Id.). According to Defendants, it is not enough to sell a
product that is capable of infringing. (Id. at 19). Rather, Defendants would have me require that
the accused products be plugged in, connected to a data network, and otherwise set up as
described in the claims before finding infringement. (Id.). This I decline to do.
Defendants cite numerous Federal Circuit opinions they claim support their
position. (Id. at 16, 19). Defendants misunderstand the Federal Circuit's holdings in
these cases. For example, in Nazomi, the Federal Circuit found that the accused hardware
did not infringe because separate software, which was not installed on the device prior to
sale, was required in order to meet the claim limitations. Nazomi Commc 'ns, Inc. v.
Nokia Corp., 739 F.3d 1339, 1345-46 (Fed. Cir. 2014). The court found that installing

the separate software was a modification of the accused product. Id. at 1345. The
Federal Circuit has repeatedly held that,
even absent its use (or performance) ... an apparatus claim directed to a computer
that is claimed in functional terms is nonetheless infringed so long as the product
is designed in such a way as to enable a user of that [product] to utilize the
function ... without having to modify [the product].
Silicon Graphics, Inc. v. AT! Technologies, Inc., 607 F.3d 784, 794 (Fed. Cir. 2010). It seems

clear to me that the steps Defendants suggest the end user must take in order to "configure" the
accused products to infringe do not amount to "modifying" the products. If the accused products
ship with firmware pre-installed that enables the end user to utilize the functions described in the
asserted claims, then that is all that is necessary for the sale or importation of the product to
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constitute infringement.
Defendants further argue that the accused player devices cannot infringe as sold or
imported because in order for the devices to be capable of performing the accused functionality,
a controller app must be downloaded and installed on the end user's cell phone. (D.I. 298 at 17).
Defendants contend that this necessarily means that neither the accused device nor the app
"alone is 'capable' of performing the claimed functionality without modification." (Id. at 18).
Again, I disagree. As I already noted, the devices ship with firmware pre-installed, such that the
device is capable of meeting all limitations of the asserted claims without modification. The
same is true of the app that Plaintiff accuses of infringing the asserted claims of the controller
patent. 1 Therefore, it seems clear that, at a minimum, there are disputed issues of material fact
on the issue of direct infringement. Defendants' motion is denied.
Defendants also move for summary judgment of no indirect infringement, arguing that
Plaintiff has not identified any instances of direct infringement by third parties. (D.I. 301 at 11 ).
Defendants suggest that the accused devices are capable of substantial non-infringing uses. (Id.).
As an initial matter, I reject Defendants' argument to the extent that it relies on its contention that
the accused products cannot directly infringe as sold. Furthermore, Plaintiff points to substantial
evidence in the record that third parties actually use the claimed functionality. (D.I. 351 at 13).
Defendants further argue that, at least as to the seven patents added in Plaintiff's Third
Amended Complaint, Plaintiff has not presented evidence of affirmative acts taken by
Defendants to encourage infringement of the patents. (D.I. 301 at 12). Defendants argue that
Plaintiff's evidence of induced infringement pre-dates the filing date of this suit and, therefore,

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As Plaintiff notes in its opposition brief, it has not made any direct infringement allegations based on sale or
importation as to the controller patents. (D.I. 350 at 22). Rather, Plaintiffs theory of infringement for these
asserted claims is that a download and installation of the app constitutes making the patented device. (Id. at 22-23).

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cannot serve as evidence of induced infringement of patents issued after the suit was filed. (Id.
at 13). Again, having rejected Defendants' "configured to" argument, I reject Defendants'
argument here to the extent that it depends on the devices actually being set up, connected to a
data network, or otherwise "configured" by an end user. Furthermore, Plaintiff has cited to
sufficient evidence in the record post-dating Defendants' knowledge of the patents to at least
raise a genuine issue of material fact as to whether Defendants encourage third parties to use the
accused products in such a way as to use the functionality claimed in the asserted patents. (D.I.
351 at 19-20).
Finally, Defendants argue that Plaintiff cannot establish contributory infringement
because Plaintiff has failed to prove that the devices have no substantial non-infringing uses.
(D.I. 301 at 16). Plaintiff replies that it need only show that the accused component, not the
entire device, is not capable of substantial non-infringing uses. (D.I. 351 at 22). Plaintiff further
argues that because the apparatus and computer readable medium claims "cover functional
capability rather than requiring actual performance of the recited function to infringe," the
existence of non-infringing uses is irrelevant. (Id. at 23). I again reject Defendants' arguments
to the extent that they rely on the "configured" theory, which I have already rejected. I also think
that Plaintiff has at least raised a genuine issue of material fact as to whether the accused
components of Defendants' products have substantial non-infringing uses. Defendants' motion is
denied.
For the reasons given above, I deny Defendants' Motion for Summary Judgment of No
Direct Infringement and Defendants' Motion for Summary Judgment of No Indirect
Infringement.

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Entered

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this~day of August, 2017.