Sonos Inc. v. D&M Holdings Inc. et al
Filing
497
MEMORANDUM OPINION AND ORDER granting 463 MOTION for Summary Judgment -- Defendants' Motion for Judgment on Absolute Intervening Rights With Respect to The '949 Patent --. Signed by Judge William C. Bryson on 12/7/2017. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
SONOS, INC.,
Plaintiff,
v.
D&M HOLDINGS INC. d/b/a THE D+M
GROUP, D&M HOLDINGS U.S. INC., and
DENON ELECTRONICS (USA), LLC,
Defendants.
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Civil Action No. 14-1330-WCB
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion for Judgment on Absolute Intervening Rights
with Respect to the ’949 Patent, Dkt. No. 463. The motion is granted.
BACKGROUND
Defendants D&M Holdings Inc., D&M Holdings U.S. Inc., and Denon Electronics
(USA), LLC (collectively, “D&M”) seek a ruling that D&M is not liable for patent infringement
for specific things that D&M made, offered for sale, sold, or used before the issuance of the
reexamination certification for plaintiff Sonos, Inc.’s U.S. Patent No. 8,588,949 (“the ’949
patent”), on November 5, 2015. D&M invokes what is referred to as the “absolute intervening
rights” that are provided by the first sentence of the second paragraph of section 252 of the
Patent Act, 35 U.S.C. § 252. That sentence reads as follows:
A reissued patent shall not abridge or affect the right of any person or that
person’s successors in business who, prior to the grant of a reissue, made,
purchased, offered to sell, or used within the United States, or imported into the
United States, anything patented by the reissued patent, to continue the use of, to
offer to sell, or to sell to others to be used, offered for sale, or sold, the specific
thing so made, purchased, offered for sale, used, or imported unless the making,
using, offering for sale, or selling of such thing infringes a valid claim of the
reissued patent which was in the original patent.
Section 307(b) of the Patent Act, 35 U.S.C. § 307(b), provides that the protections of section 252
apply to reexamined patents as well as reissued patents. 1
A significant portion of Sonos’s damages claim in this case pertains to D&M’s alleged
infringing activity that took place prior to November 5, 2015, the issuance date of the
reexamination certificate for the ’949 patent. D&M claims that it enjoys absolute intervening
rights under section 252 for all of its activities alleged to infringe both asserted claims of the
’949 patent, claims 1 and 16.
The intervening rights issue has been raised twice before in this litigation. First, Sonos
filed a motion for a summary judgment seeking a ruling from the Court that D&M could not
invoke intervening rights. Dkt. No. 289. In an opinion issued on November 1, 2017, the Court
denied Sonos’s motion. Dkt. No. 428. Subsequently, D&M filed a motion in limine seeking a
ruling from the Court that, because of intervening rights, Sonos should not be allowed to
introduce evidence of infringement of the ’949 patent attributable to those products that were
made, used, purchased, sold, or offered for sale before November 5, 2015. Dkt. No. 438. The
Court denied the motion, ruling that the request was not appropriate as a motion in limine
because it sought a dispositive ruling with respect to a portion of the claimed relief in this case.
Dkt. No. 453. The Court subsequently granted D&M leave to seek a dispositive ruling on that
1
D&M has not asserted the defense of equitable intervening rights, which is embodied in
the second sentence of the second paragraph of section 252. See Dkt. No. 343, at 4-5. The
statutory provision establishing equitable intervening rights authorizes the court to allow the
continued manufacture, use, or sale of additional products covered by the reissued or reexamined
patent when the accused infringer made, purchased, or used identical products, or made
substantial preparations to make, use, or sell identical products, before the reissue or
reexamination date, “under such terms as the court deems equitable for the protection of
investments made or business commenced.” 35 U.S.C. § 252 (second paragraph, second
sentence); see Shockley v. Arcan, Inc., 248 F.3d 1349, 1360-61 (Fed. Cir. 2001).
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issue with full briefing. Dkt. No. 455. The parties have now briefed the issue, Dkt. Nos. 463,
472, and the Court is prepared to rule.
DISCUSSION
By its terms, section 252 makes clear that in order to establish entitlement to absolute
intervening rights with regard to the ’949 patent, D&M must show that the asserted reexamined
claims of that patent were not “in the original patent.” Thus, if the claims of the reexamined
patent have been changed in substance from the original claims, D&M satisfies that prerequisite
for entitlement to intervening rights. D&M must then show that the statutory protection applies
to its activities.
The two asserted claims of the ’949 patent are claims 1 and 16. Claim 16 depends from
independent claim 15. In their original form, the claims provided as follows:
1. A multimedia controller including a processor, the controller
configured to:
provide a user interface for a player group, wherein the player group
includes a plurality of players in a local area network, and wherein each layer is
an independent playback device configures to playback a multimedia output form
a multimedia source;
accept via the user interface an input to facilitate formation of the player
group, wherein the input to facilitate formation of the player group indicates that
at least two of the plurality of players in the local area network are to be included
in the player group;
for each of the plurality of players within the player group, accept via the
user interface an input to adjust a volume associated with the player, wherein the
input to adjust the volume associated with the player causes the corresponding
independent playback device to adjust its volume; and
accept via the user interface an input to adjust a volume associated with
the player group, wherein the input to adjust the volume associated with the group
causes the corresponding independent playback devices in the player group to
adjust their volumes.
15. A method comprising:
displaying a user interface for a player group, wherein the player group
includes a plurality of players in a local area network, and wherein each layer is
an independent playback device configures to playback a multimedia output form
a multimedia source;
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receiving via the user interface an input to facilitate formation of the
player group, wherein the input to facilitate formation of the player group
indicates that at least two of the plurality of players in the local area network are
to be included in the player group;
receiving via the user interface an input to adjust a volume associated with
one of the players within the player group, and responsively instructing the
corresponding independent playback device within the player group to adjust its
volume; and
receiving via the user interface an input to adjust a volume associated with
the player group, and responsively instructing the corresponding independent
playback devices in the player group to adjust their volumes.
16. The method of claim 15, further comprising:
receiving via the user interface an input to remove one of the plurality of
players from the player group, and responsively removing the one of the plurality
of players from the player group.
Claim 16 was not amended during the reexamination. Following the reexamination,
claims 1 and 15 were rewritten to provide as follows 2:
1. A multimedia controller including a processor, the controller
configured to:
provide a user interface for a player group, wherein the player group
includes a plurality of players in a local area network, and wherein each layer is
an independent playback device configures to playback a multimedia output form
a multimedia source;
accept via the user interface an input to facilitate formation of the player
group, wherein the input to facilitate formation of the player group indicates that
at least two of the plurality of players in the local area network are to be included
in the player group for synchronized playback of a multimedia output from the
same multimedia source;
for [each of the plurality of players within] any individual player in the
player group, accept via the user interface [an] a player-specific input to adjust a
volume [associated with the] of that individual player, wherein the player-specific
input to adjust the volume [associated with the] of that individual player causes
[the corresponding independent playback device] that individual player to adjust
its volume; and
accept via the user interface [an] a group-level input to adjust a volume
associated with the player group, wherein the group-level input to adjust the
volume associated with the player group causes [the corresponding independent
playback devices] each of the players in the player group to adjust [their volumes]
its respective volume.
2
Italics indicate additions; text within brackets was removed.
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15. A method comprising:
displaying a user interface for a player group, wherein the player group
includes a plurality of players in a local area network, and wherein each layer is
an independent playback device configures to playback a multimedia output form
a multimedia source;
receiving via the user interface an input to facilitate formation of the
player group, wherein the input to facilitate formation of the player group
indicates that at least two of the plurality of players in the local area network are
to be included in the player group for synchronized playback of a multimedia
output from the same multimedia source;
receiving via the user interface [an] a player-specific input to adjust a
volume [associated with one of the players within] of an individual player in the
player group, and responsively instructing [the corresponding independent
playback device] that individual player to adjust its volume; and
receiving via the user interface [an] a group-level input to adjust a volume
associated with the player group, and responsively instructing [the corresponding
independent playback devices] each of the players in the player group to adjust
[their volumes] its respective volume.
A.
The “absolute intervening rights” provision in section 252 provides that the owner of a
patent that survives reexamination “is only entitled to infringement damages for the time period
between the date of issuance of the original claims and the date of the reexamined claims if the
original and the reexamined claims are substantially identical.” Convolve, Inc. v. Compaq
Comput. Corp., 812 F.3d 1313, 1322 (Fed. Cir. 2016) (quoting R & L Carriers, Inc. v.
Qualcomm, Inc., 801 F.3d 1346, 1351 (Fed. Cir. 2015)). In determining whether the original and
reexamined claims are substantially identical, “[i]t is the scope of the claim that must be
identical, not that identical words must be used.” Id. (quoting Slimfold Mfg. Co. v. Kinkead
Indus., Inc., 810 F.2d 1113, 1116 (Fed. Cir. 1987)). Amendments made during reexamination,
even those made after a rejection based on prior art, “do not necessarily compel a conclusion that
the scope of the claims has been substantively changed,” even when the amendments were made
“after a rejection based on prior art.” Id. Rather, “[t]o determine whether a claim change is
substantive it is necessary to analyze the claims of the original and the reexamined patents in
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light of the particular facts, including the prior art, the prosecution history, other claims, and any
other pertinent information.” Id. (alteration in original) (quoting Laitram Corp. v. NEC Corp.,
952 F.2d 1357, 1362-63 (Fed. Cir. 1991)). The court applies traditional claim construction
principles and pays “particular attention to the ‘examiner’s focus in allowing the claims’ after
amendment.” Id. at 1322-23 (quoting R & L Carriers, Inc., 801 F.3d at 1351).
The parties disagree about whether claims 1 and 16 of the ’949 patent were changed in
reexamination. The main change made in both claims was the addition, in reexamined claim 1
and claim 16 (through reexamined claim 15), of the words “for synchronized playback of a
multimedia output from the same multimedia source.”
Sonos’s expert, Dr. Almeroth, stated in his report that “[a]fter reviewing the differences
between the original and amended claims of the ’949 patent, it is my opinion that the
amendments made during prosecution of the ’949 patent did not substantively change the scope
of the claims.” Dkt. No. 311, Ex. E-3, at 75 (¶ 205). Instead, he stated, “it is my opinion that
these amendments merely clarified the claim language by making explicit what was always
implicit in the original claims when such claims were viewed in the context of the intrinsic
evidence.” Id. He added that in his view it was “clear that ‘synchronized playback of a
multimedia output from the same multimedia source’ was an implicit aspect of a ‘player group’
as recited in the original claims.” Id.
D&M’s expert, Dr. Bims, disagreed.
He pointed out that in the course of the
reexamination, all of the claims of the original patent were rejected as anticipated by U.S. Patent
No. 5,761,320 to Farinelli. Dkt. No. 309, Ex. C, at 77 (¶ 246). Sonos did not at that point amend
its claims, but argued that Farinelli was not an anticipating reference. Id. at 77-79 (¶¶ 247-49).
After the examiner issued a final rejection, however, Sonos amended claims 1 and 15 to add the
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language “synchronized playback of a multimedia output from the same multimedia source” that
has given rise to D&M’s claim of intervening rights. Id. at 79-80 (¶¶ 250-54).
As D&M points out, amendments made to overcome a prior art rejection during
reexamination are “a highly influential piece of prosecution history,” and it is “difficult to
conceive of many situations in which the scope of a rejected claim that became allowable when
amended is not substantively changed by the amendment.” Laitram Corp. v. NEC Corp., 163
F.3d 1342, 1348 (Fed. Cir. 1998). Because the evidence shows that the language that was
added during reexamination to claims 1 and 15 (and thus to dependent claim 16) was added to
overcome a prior art rejection, Sonos bears a heavy burden to show that the claims were not
substantively altered.
Sonos attempts to meet that burden by arguing that the proper construction of the term
“player group” in original claims 1 and 16 implicitly contained requirements that the player
group be “for synchronized playback of a multimedia output from the same multimedia
source.” Sonos relies on the specification of the ’949 patent, which discloses that players in
networked multi-room audio systems can be dynamically grouped together so that the players
are configured for synchronous playback of audio from the same source.
The problem with Sonos’s argument is that nothing in the specification indicates that the
capacity for synchronous playback is a necessary limitation of original claims 1 or 16.
Although there are numerous references in the specification to synchronous playback, almost
all of them are in the context of describing either (1) “one aspect of the present invention,” ’949
patent, col. 2, ll. 30-35; (2) a preferred embodiment, id., col. 3, ll. 6-15, 28-39; col. 6, ll. 56-58;
col. 7, ll. 46-49; col. 8, ll. 1-8; or (3) an example, id., col. 9, ll. 49-59; col. 10 ll. 20-29. Only
one passage from the specification among the passages cited by Sonos does not fall into one of
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those categories. That passage, found at column 3, lines 40-45, states: “One of the objects,
features, and advantages of the present invention is to remotely control a plurality of
multimedia players in a multi-zone system, playing and controlling the audio source
synchronously if the players are grouped together, or playing and controlling the audio source
individually if the players are disassociated with each other.” Given the frequency with which
the specification describes the synchronous playback capacity as a feature of preferred
embodiments, that passage is not sufficient to indicate that original claims 1 and 16, which do
not include any reference to synchronous playback, nonetheless implicitly require that
capability. The Court therefore concludes that Sonos has not satisfied the heavy burden of
showing that, notwithstanding the alteration in the claim language based on the examiner’s
prior art rejection, the change made to the claims during reexamination had no effect on their
scope.
B.
Sonos next argues that even if intervening rights are available to D&M with regard to
claim 1 of the ’949 patent, an apparatus claim, intervening rights are not available with regard
to claim 16, a method claim. Sonos points to the difference between the portion of section 252
that creates absolute intervening rights and the portion that creates equitable intervening rights.
Only the latter extends intervening rights to “any process patented” by the reexamined patent.
Based on that difference in the statutory text, Sonos argues that absolute intervening rights have
no application to method claims, such as claim 16 of the ’949 patent. See NetAirus Techs.,
LLC v. Apple, Inc., No. LA CV10-3257, 2013 WL 3089061, at *6 (C.D. Cal. May 23, 2013).
A close reading of the statute makes it clear that the matter is not that simple. The
statutory protection offered by absolute intervening rights does not depend on whether the
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claims at issue are apparatus or method claims. Rather, absolute intervening rights extend to
the “specific thing” that that was made, purchased, offered for sale, used, or imported before the
issuance of the reissued or reexamined claims.
Thus, the distinction between absolute
intervening rights and equitable intervening rights is that absolute intervening rights extend
only to those “specific thing[s]” in existence before the reissuance or reexamination, while
under the doctrine of equitable intervening rights, a court can allow a party to continue to
practice a process covered by the reissued or reexamined patent if the statutory conditions for
that relief are satisfied. See generally BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d
1214, 1220-21 (Fed. Cir. 1993) (noting the narrow statutory language applicable to absolute
intervening rights as compared to the broader language applicable to equitable intervening
rights). 3
As the Court noted in its order dated November 1, 2017, drawing a sharp line between
product claims and method claims in determining eligibility for absolute intervening rights could
result in defeating the purpose of the statute to provide intervening rights for particular goods
made prior to the reissue or reexamination. For example, if particular goods were made by a
process that is separately covered by a process claim that was also changed upon reissuance or
reexamination, absolute intervening rights would be of no benefit to the accused infringer if the
patentee could simply assert a parallel process claim against the process that was used to make
the very same products that were intended to be protected by absolute intervening rights. Thus,
3
P.J. Federico, one of the principal authors of the 1952 Patent Act that added section 252
explained that the protection of absolute intervening rights extended only to the things made
before the reissue, whereas equitable intervening rights could extend to “the continued practice
of a process patented by the reissue” if the court determined that it was equitable to so provide.
See P.J. Federico, Commentary on the New Patent Act, 75 J. Pat. & Trademark Off. Soc’y 161,
207-08 (1975 reprint; original 1954); P.J. Federico, Intervening Rights in Patent Reissues, 30
Geo. Wash. L. Rev. 603, 632-33 (1961-62).
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to apply the statutory language, it is necessary to focus on the nature of the product or the
activity in question so as to determine whether the protection of absolute intervening rights is
being extended to “specific thing[s]” in existence at the time of the reexamination.
C.
Applying absolute intervening rights in the context of claim 16 of the ’949 patent is
rendered somewhat difficult by the fact that the product accused of infringing that claim is in the
form of downloaded software. See Dkt. No. 437-1, Ex. J (Sonos’s infringement chart). If the
accused controller were a physical device sold by D&M that performed all the functions of the
D&M controller software, the application of absolute intervening rights would be
straightforward. Assuming a substantive change in claim 16, as the Court has found, D&M
would be entitled to “continue the use of, to offer to sell, or to sell to others to be used, offered
for sale, or sold” the specific controllers that had been “made, purchased, offered for sale, used,
[or] imported.” 35 U.S.C. § 252. The use or sale of those particular controllers that had already
been manufactured would not be subject to infringement liability, even if they were used to
practice the method recited in claim 16. Controllers made after the date of the reexamination
certificate, however, would be subject to both the apparatus claim 1 and the method claim 16.
The same analysis would apply if the controller software were sold in a tangible
package—for example, as a CD with the software loaded onto it. Absolute intervening rights
would attach to the particular CDs that were in existence as of the date of the reexamination, but
not to any CDs produced thereafter.
The CDs that were made prior to the date of the
reexamination could be sold, and the purchasers could use them on a device capable of
displaying the allegedly infringing user interface without liability for infringement.
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Logic requires that the same reasoning be applied to software that is distributed to
customers by being downloaded. In that instance, the particular copies of the downloaded
software that were distributed before the issuance of the reexamination certificate are the
“specific thing[s]” that are protected by absolute intervening rights. Copies made after the
reexamination certificate was issued are subject to infringement liability under both claims 1 and
16. For that reason, the Court holds that D&M is not liable for infringement of claims 1 or 16 of
the ’949 patent based on the download of those copies of its controller application that occurred
prior to November 5, 2015, and the subsequent use of those copies. Any copies of the software
made thereafter would not be protected by absolute intervening rights and thus would be subject
to infringement liability.
The Court therefore directs that the scope of Sonos’s infringement claims and its
potential relief in the form of damages will be limited by the operation of absolute intervening
rights in accordance with the foregoing opinion.
IT IS SO ORDERED.
SIGNED this 7th day of December, 2017.
_____________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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