CIVIX-DDI LLC v. Hotels.com L.P. et al

Filing 741

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 11/1/2012:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CIVIX-DDI, LLC,
Plaintiff,
v.
HOTELS.COM, LP and HOTELS.COM
GP LLC,
Defendants.

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Case No. 05 C 6869

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Plaintiff Civix-DDI, LLC (“Civix”) accused Defendants Hotels.Com, LP, and
Hotels.Com GP, LLC (collectively “Hotels.com”) of infringing Claims 20 and 26 of U.S. Patent
No. 6,385,622 (“the ‘622 patent”) and Claim 23 of U.S. Patent No. 6,415,291 (“the ‘291
patent”). On August 19, 2011, the Court granted Hotels.com’s summary judgment motion
disposing of Civix’s infringement claims. The Court presumes familiarity with the August 29,
2011, Memorandum, Opinion, and Order. Before the Court is Civix’s Federal Rule of Civil
Procedure 54(b) motion to reconsider the Court’s August 19, 2011 order in relation to Claim 23
of the ‘291 patent based upon the Federal Circuit’s en banc decision in Akamai Tech., Inc. v.
Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (per curiam).
For the following reasons, the Court, in its discretion, grants Civix’s motion for
reconsideration because there are genuine disputes as to the material facts of whether Hotels.com
induced infringement under 35 U.S.C. § 271(b) in relation to the elements of Claim 23 of the
‘291 patent. The Court, however, rejects any argument that under Akamai, Hotels.com and its

users directly infringed Claim 23 of the ‘291 patent because the Akamai court made it
abundantly clear that its decision was “not predicated on the doctrine of direct infringement,”
and thus it had “no occasion at th[at] time to revisit any of those principles regarding the law of
divided infringement as it applies to liability for direct infringement under 35 U.S.C. § 271(a).”
Id. at 1307.
BACKGROUND
On December 6, 2005, Civix filed the present patent infringement lawsuit against
Hotels.com, as well as other companies that are no longer parties to this lawsuit. On August 24,
2006, Civix filed a Second Amended Complaint alleging that Hotels.com had infringed the ‘622
patent and the ‘291 patent, as well as other intellectual property rights. On June 2, 2006,
Hotels.com filed a motion for partial summary judgment based on the CIVIX-Navteq and
CIVIX-Mapquest agreements in which Hotels.com invoked its status as a third-party beneficiary
to the licenses and covenants-not-to-sue contained in these agreements. On January 22, 2007,
the Court granted partial summary judgment as to Hotels.com with respect to certain alleged
infringement for activities under the MapQuest-Hotels.com license agreement. The Court
further concluded that although Hotels.com was a third-party beneficiary to the CIVIX-Navteq
agreement, there were genuine issues of material fact for trial concerning whether Hotels.com’s
activities related to the Navteq technology.
On September 17, 2007, the Court stayed these proceedings pending the U.S. Patent and
Trademark Office’s (“PTO”) ex parte reexamination of the ‘291, ‘622, and other patents. In
August 2009, the PTO issued reexamination certificates for the ‘622 and ‘291 patents, which
cancelled many, but not all of the claims. After the Court lifted the stay in this matter,
Hotels.com filed a Second Amended Answer and Counterclaims on February 3, 2010. After the
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parties conducted discovery, on May 4, 2011, Hotels.com filed a motion for summary judgment
arguing that there was no direct or induced infringement of both Claim 20 of the ‘622 patent and
Claim 23 of the ‘291 patent. Civix, however, did not move for summary judgment to resolve
any of Hotels.com’s counterclaims. On August 19, 2011, the Court granted Hotels.com’s
summary judgment motion disposing of Civix’s infringement claims and mistakenly entered a
final judgment order without addressing Hotels.com’s counterclaims. On September 15, 2011,
Civix filed a notice of appeal to the Federal Circuit. On May 1, 2012, the Federal Circuit
dismissed Civix’s appeal for lack of jurisdiction. See 28 U.S.C. § 1295(a)(1).
Upon remand and after the Court denied Civix’s motion for entry of judgment pursuant
to Rule 54(b), the Court set a trial date of January 23, 2013 for Hotels.com’s remaining
counterclaims. Since then, the Federal Circuit issued its en banc decision in Akamai upon which
Civix bases its motion for reconsideration of the Court’s August 19, 2011, Memorandum,
Opinion, and Order granting Hotels.com’s summary judgment motion.
LEGAL STANDARD
Federal Rule of Civil Procedure 54(b) permits the Court to exercise its inherent authority
to reconsider its interlocutory orders. See Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 12, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (“every order short of a final decree is
subject to reopening at the discretion of the district judge”); Sims v. EGA Prods., Inc., 475 F.3d
865, 870 (7th Cir. 2007) (“nonfinal orders are generally modifiable”). Reconsideration motions
under Rule 54(b) serve the limited function of correcting manifest errors of law or fact. See
Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir. 1987); Zurich Capital Mkt.,
Inc. v. Coglianese, 383 F. Supp.2d 1041, 1045 (N.D. Ill. 2005). As the Seventh Circuit explains,
“[i]t is well established that a motion to reconsider is only appropriate where a court has
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misunderstood a party, where the court has made a decision outside the adversarial issues
presented to the court by the parties, where the court has made an error of apprehension (not of
reasoning), where a significant change in the law has occurred, or where significant new facts
have been discovered.” Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011) (citing Bank of
Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990)). Whether to
grant a motion for reconsideration is “entrusted to the sound judgment of the district court.”
Matter of Prince, 85 F.3d 314, 324 (7th Cir. 1996); see also Damasco v. Clearwire, 662 F.3d
891, 891 (7th Cir. 2011).
ANALYSIS
I.

Significant Change in Law
In its motion for reconsideration, Civix contends that the Federal Circuit’s decision in

Akamai is a significant change in law warranting the Court to reconsider its summary judgment
ruling. The Court agrees. In Akamai, the Federal Circuit addressed the questions of “whether a
defendant may be held liable for induced infringement if the defendant has performed some of
the steps of a claimed method and has induced other parties to commit the remaining steps or if
the defendant has induced other parties to collectively perform all the steps of the claimed
method, but no single party has performed all of the steps itself.” Id. at 1305 (internal
parentheticals omitted). In doing so, the Federal Circuit held that “all the steps of a claimed
method must be performed in order to find induced infringement, but that it is not necessary to
prove that all the steps were committed by a single entity.” Id. at 1306. The Akamai decision
thus overruled the portion of BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir.
2007), which required “that in order for a party to be liable for induced infringement, some other
single entity must be liable for direct infringement.” Akamai, 692 F.3d at 1306.
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The Federal Circuit in Akamai remanded the two district court decisions in which the
lower courts concluded that the accused infringers did not induce infringement because thirdparties performed one or more of the claimed steps of the asserted method claim. See id. at
1306-07. As the Akamai court explained, the claimed method in the Akamai district court case
was directed to a method of efficiently delivering web content. See id. at 1306. In particular, the
claimed method included the following steps: (1) placing some of a content provider’s content
elements on a set of replicated servers; and (2) modifying the content provider’s web page to
instruct web browsers to retrieve that content from those servers. See id. The accused infringer,
Limelight, performed the first step of content placement, however, it did not perform the second
step of the modification. See id. Instead, Limelight instructed its customers of the steps
necessary to perform the modification. See id. Accordingly, the Akamai district court case
highlighted the situation in which the “defendant has performed some of the steps of a claimed
method and has induced other parties to commit the remaining steps.” See id. The Federal
Circuit remanded the matter and directed the Akamai district court to apply the following test to
determine whether Limelight was liable for inducing infringement: “(1) Limelight knew of
Akamai’s patent; (2) it performed all but one of the steps of the method claimed in the patent; (3)
it induced the content providers to perform the final step of the claimed method; and (4) the
content providers in fact performed that final step.” Id. at 1318.
Similarly, in McKesson, the claimed method was directed to a method of electronic
communication between healthcare providers and their patients. See id. at 1306. The accused
infringer, Epic, did not perform any steps of the patent, instead, Epic provided the software that
the patients and healthcare providers used, after which the patients and healthcare providers
would perform the claimed steps. Id. The McKesson case thus highlighted the problems with
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situations in which “the defendant has induced other parties to collectively perform all the steps
of the claimed method, but no single party has performed all of the steps itself.” See id. at 1305.
The Federal Circuit remanded McKesson stating that “Epic can be held liable for inducing
infringement if it can be shown that (1) it knew of McKesson’s patent, (2) it induced the
performance of the steps of the method claimed in the patent, and (3) those steps were
performed.” Id. at 1318.
In sum, when holding that “all the steps of a claimed method must be performed in order
to find induced infringement, but that it is not necessary to prove that all the steps were
committed by a single entity,” the Federal Circuit reasoned:
[A] party who performs some of the steps itself and induces another to perform
the remaining steps that constitute infringement has precisely the same impact on
the patentee as a party who induces a single person to carry out all of the steps. It
would be a bizarre result to hold someone liable for inducing another to perform
all of the steps of a method claim but to hold harmless one who goes further by
actually performing some of the steps himself.
Id. at 1309.
II.

Asserted Claim at Issue
As discussed in the Court’s August 2011 summary judgment order, dependent Claim 23

of the ‘291 patent is directed to “[a] method of claim 21, wherein the step of supplying
information comprises supplying one or more video clips and digitized images related to the one
item of interest.” Claim 21 comprises “[a] method of claim 14, wherein the step of supplying
information comprises supplying advertising information about a business.” Independent Claim
14 states:
A method for determining the position of one or more items of interest in a
selected category, comprising:

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storing information about the items of interest in a database, the information
including, for each of the items of interest, at least one associated category and
spatial detail defining a geographic position; and
supplying information about at least one of the items of interest to one of a
plurality of ports, connected to the database at least in part through the Internet, in
response to inputs at the one port, wherein a user at the port may locate the one
item of interest.
III.

Summary Judgment Order
In the August 19, 2011 order granting summary judgment, the Court concluded that

Hotels.com did not infringe Claim 23 of the ‘291 patent because (1) the accused method does not
store or supply “advertising information about a business” and (2) the Hotels.com database does
not store video. In the present motion, Civix argues that because the Court applied precedent
that Akamai overruled, there are genuine disputes as to the material facts whether Hotels.com
induced infringement in violation of 35 U.S.C. § 271(b).
A.

Whether Accused Method Stores or Supplies Advertising Information About
a Business

At summary judgment, when determining whether the accused method stores or supplies
advertising information about a business, the Court relied upon the undisputed fact that the
Hotels.com database does not store advertising information and that Civix had “not introduced
any evidence to the effect that Hotels.com, as opposed to a third party, delivers advertising
information about a business.” Under the substantive change of law under Akamai, however, the
fact that there was no evidence in the record that Hotels.com delivers advertising information
about a business itself is no longer the appropriate inquiry for the Court to consider when
determining whether Hotels.com is liable. See Akamai, 692 F.3d at 1306 (holding that it is not
necessary to establish that all the steps were committed by a single entity for a finding of
induced infringement).
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In Hotels.com’s summary judgment opening brief, it maintained that third-party
DoubleClick provides the step of “supplying advertising information about a business.” (R. 679,
Def.’s SJ Mem., at 23.) As such, because induced infringement is not a strict liability tort, there
is a genuine dispute of material fact whether Hotels.com knowingly induced DoubleClick’s
alleged infringement and possessed specific intent to encourage another’s infringement. See
Akamai, 692 F.3d at 1308. Also at summary judgment, Civix presented undisputed evidence that
Hotels.com uses iFrame, which designates advertising space on the search results page and
directs the user’s browser to obtain advertising content to fill the space. (R. 697, Hotels.com
Rule 56.1 Resp. ¶ 42.) As such, there is a genuine dispute of material fact whether Hotels.com
induced a user to engage in an infringing manner. Moreover, under Akamai, inducement does
not require that Hotels.com directed or controlled the third-party’s conduct, instead, it is enough
for Civix to show that Hotels.com caused, urged, encouraged, or aided the infringing conduct
and that the third-party carried out this conduct. Id. These are all questions for the jury.
B.

Whether Accused Method Stores Video

Next, at summary judgment, the Court concluded that there was no factual dispute that
Hotels.com did not store video on its own database. In view of Akamai, however, the
appropriate inquiry is whether the accused method stores video either in its own database or
stores video via a third-party. See id. at 1306. In response to Civix’s Rule 56.1 Statement of
Additional Facts, specifically ¶ 46, Hotels.com stated that it is “[u]ndisputed that Hotels.com
formerly stored a procedure to obtain virtual tours from Expedia, which is a third party (not
controlled by Hotels.com) and not named as a defendant in this lawsuit.” (R. 697, Hotels.com
Rule 56.1 Resp. ¶ 46.) Thus, as above, in light of Akamai, there is a genuine dispute of material

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fact whether Hotels.com knowingly induced infringement and possessed specific intent to
encourage Expedia’s infringement. See id. at 1308.
On a final note, Hotels.com’s argument that Civix never proffered an inducement theory
is belied by the record. In other words, unlike the plaintiff in Deep9 Corp. v. Barnes & Noble,
Inc., No. C11-0035JLR, 2012 WL 4336726, at *15 (W.D. Wash. Sept. 12, 2012), Civix has
alleged induced infringement from the onset of this lawsuit. Specifically, Civix alleged induced
infringement of Claim 23 in its December 6, 2005 Complaint, January 11, 2006 First Amended
Complaint, and August 24, 2006 Second Amended Complaint. (R. 1, Compl. ¶ 14; R. 18, First.
Am. Compl. ¶ 15, Second. Am. Compl. ¶ 18.) In addition, Civix included its theory of
inducement in its responses to Hotels.com interrogatories requesting Civix’s infringement
contentions. (R. 739, Exs. A-C.) Further, during the stay pending the PTO’s ex parte
reexamination of the ‘291 and ‘622 patents, the Federal Circuit decided BMC, which Akamai
later overruled. In other words, during the time period between BMC and Akamai, the singleactor standard was good law, see Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329
(Fed. Cir. 2008), and thus Civix could not have pursued its inducement theory in good faith
under Rule 11’s requirements. Last, at summary judgment, Civix put the Court and Hotels.com
on notice that the Akamai en banc appeal was pending and of the relevant issues involved. (R.
688, Pl.’s Brief Opp., at 5.)

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CONCLUSION
For these reasons, the Court grants Civix’s motion for reconsideration regarding Civix’s
induced infringement allegations related to the elements of Claim 23 of the ‘291 patent.
Date: November 1, 2012
ENTERED

_______________________________
AMY J. ST. EVE
United States District Court Judge

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