Prism Technologies v. Adobe Systems Incorporated et al

Filing 393

MEMORANDUM AND ORDER - Defendants' motion for summary judgment (Filing No. 288 ) is denied, without prejudice, with leave to re-file following the issuance of the Court's memorandum and order as to claim construction, subsequent to the January 2012 hearing; and Prism's motion to strike or, in the alternative, to file surreply brief (Filing No. 376 ) is denied as moot. Ordered by Senior Judge Lyle E. Strom. (TEL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
PRISM TECHNOLOGIES, LLC,

)
)
Plaintiff,
)
)
v.
)
)
ADOBE SYSTEMS, INCORPORATED, )
AUTODESK, INC.; McAFEE, INC., )
NATIONAL INSTRUMENTS
)
CORPORATION; SAGE SOFTWARE,
)
INC., SYMANTEC CORPORATION;
)
THE MATHWORKS, INC., and
)
TREND MICRO INCORPORATED,
)
)
Defendants.
)
______________________________)

8:10CV220

MEMORANDUM AND ORDER

This matter is before the Court on defendants’ motion
for summary judgment pursuant to Federal Rule of Civil Procedure
56 (Filing No. 288).

In this case, plaintiff Prism Technologies,

LLC (“Prism”) alleges infringement of its patent, U.S. Patent No.
7,290,288 (“’288 patent”), by defendants Adobe Systems, Inc.,
Autodesk, Inc., McAfee, Inc., National Instruments Corp., Sage
Software, Inc., Symantec Corp., The Mathworks, Inc., and Trend
Micro, Inc. (collectively, “defendants”).

After reviewing the

briefs, relevant case law, and evidence, the Court will deny
defendants’ motion.
I.

Procedural History.
Prism filed its complaint in this action on June 8,

2010 (Filing No. 1).

After a planning conference held on

November 30, 2010, the Court determined that an initial Markman

claim construction hearing would be held regarding the claim term
“hardware key” because the construction of that term alone could
be case-dispositive.

Discovery, which had not yet begun, was

stayed pending the Court’s ruling on the construction of the term
“hardware key” (Filing No. 159).

On April 11, 2011, the Court

conducted the Markman hearing for the purpose of construing
“hardware key” (Filing No. 185).

After reviewing the ’288

patent, briefs, evidentiary submissions, oral arguments, and the
applicable law, the Court construed “hardware key” to mean:
An external hardware device or
object from which the predetermined
digital identification can be read.
(Filing No. 188, at 2).1
Subsequent to the April 2011 Markman hearing,
defendants moved for a summary judgment hearing schedule in
support of their contention that the construction of “hardware
key” was case-dispositive because none of the defendants’
products contained such a hardware key (Filing Nos. 189 and 191).
Conversely, Prism contended that this construction is not casedispositive because defendants’ products do contain hardware keys
pursuant to that construction (Filing No. 190).

On July 22,

2011, this Court issued an order denying defendants’ motion for a

1

The claim term “access key” was found to be synonymous
with the claim term “hardware key.”
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summary judgment hearing schedule, in effect lifting the stay so
that discovery could begin (Filing No. 198).
The Court also issued a progression order with a
discovery deadline of April 30, 2012 (Filing No. 199).

The

progression order set the date of January 12, 2012, for a second
Markman claim construction hearing regarding the other disputed
claim terms in the ’288 patent.
Defendants filed their motion for summary judgment on
October 7, 2011, less than three months after discovery had
begun, and six months before the close of discovery as per the
progression order.
Prism filed a brief in opposition to defendants’ motion
for summary judgment addressing the substantive issues of the
motion (Filing No. 334).

Prism also suggests that the Court deny

summary judgment because the motion is “premature” in the context
of Federal Rule of Civil Procedure 56(d).
II.

Standard of Review - Summary Judgment.
Summary judgment is appropriate when, viewing the facts

and inferences in the light most favorable to the nonmoving
party, “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); see Celotex Corp. v. Catrett, 477 U.S. 317, 321–23
(1986).

“The inquiry performed is the threshold inquiry of

determining whether there is the need for a trial -- whether, in

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other words, there are any genuine factual issues that properly
can be resolved only by a finder of fact because they may
reasonably be resolved in favor of either party.”
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

Anderson v.

“Where the

unresolved issues are primarily legal rather than factual,
summary judgment is particularly appropriate.”

Koehn v. Indian

Hills Cmty. Coll., 371 F.3d 394, 396 (8th Cir. 2004).
III.

Federal Rule of Civil Procedure 56(d).
Federal Rule of Civil Procedure 56(d) states,
When Facts Are Unavailable to the
Nonmovant. If a nonmovant shows by
affidavit or declaration that, for
specified reasons, it cannot
present facts essential to justify
its opposition, the court may:
(1) defer considering the motion or
deny it;
(2) allow time to obtain affidavits
or declarations or to take
discovery; or
(3) issue any other appropriate
order.2
“Although discovery need not be complete before a case

is dismissed, summary judgment is proper only if the nonmovant
has had adequate time for discovery.”

2

Robinson v. Terex Corp.

As of December 1, 2010, Rule 56(f) was recodified as Rule
56(d). “Subdivision (d) carries forward without substantial
change the provisions of the former subdivision (f).” Fed. R.
Civ. P. 56(d) 2010 amend. cmt. (2010).
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439 F.3d 465, 467 (8th Cir. 2006).

“[Rule 56(d)] allows a

summary judgment motion to be denied, or the hearing on the
motion to be continued, if the nonmoving party has not had an
opportunity to make full discovery.”

Celotex, 477 U.S. at 326.

“The nonmoving party must make a showing, however, that discovery
has been inadequate.”

Robinson, 439 F.3d at 467.

“Rule [56(d)] is not a shield that can be raised to
block a motion for summary judgment without even the slightest
showing by the opposing party that his opposition is
meritorious.”

Willmar Poultry Co. v. Morton-Norwich Prod., Inc.,

520 F.2d 289, 297 (8th Cir. 1975).

Instead, “[a] party invoking

its protections must do so in good faith by affirmatively
demonstrating . . . how postponement of a ruling on the motion
will enable him, by discovery or other means, to rebut the
movant’s showing of the absence of a genuine issue of fact.”

Id.

“[Rule 56(d)] provides a ‘safeguard against an improvident or
premature grant of summary judgment . . . and [it] should be
applied with a spirit of liberality.’”

Weber v. The Travelers

Home and Marine Ins. Co., No. 10–2142, 2011 WL 1757563, at *1 (D.
Minn. March 1, 2011) (quoting United States ex rel. Bernard v.
Casino Magic Corp., 293 F.3d 419, 426 (8th Cir. 2002)).
Here, Prism maintains that defendants’ motion for
summary judgment is premature for two reasons.

First, Prism

cites the two-step infringement analysis described by the Federal
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Circuit in Markman:

“The first step is determining the meaning

and scope of the patent claims asserted to be infringed.”
Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed.
Cir. 1995) (en banc), aff’d 517 U.S. 370 (1996).

“The second

step is comparing the properly construed claims to the device
accused of infringing.”

Id.

Prism claims that the April 2011

Markman hearing, held before discovery had begun, “resolved
nothing” and that the problem would only be compounded if summary
judgment were granted now, before the January 2012 Markman
hearing (Filing No. 334, at 26).
Prism maintains that defendants infringe its patent via
“their CD-ROMS and other hardware keys” and that the question of
infringement is dependent upon the meaning of yet-to-be
constructed terms such as “digital identification” and “identity
data” (Id.).

Ultimately, Prism claims that “summary judgment of

non-infringement is inappropriate where important claim terms
have yet to be construed” (Id. at 27).
Defendants, on the other hand, maintain that another
Markman hearing is unnecessary for the simple reason that the
only possible hardware keys produced by defendants are CD-ROMs,
all of which are mass-produced and therefore cannot provide
“digital identification” (Filing No. 368, at 1-2).

However, the

defendants have produced little evidence that would establish
that Prism’s allegation of infringement is limited to a CD-ROM.

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On the contrary, Prism’s complaint did not specify what
kind of product was the claimed hardware key.

For each

defendant, the complaint reads that the defendant “has been and
now is directly and jointly infringing the ’288 patent . . . by
making, using, offering to sell, and/or selling authentication
systems and methods for controlling access to protected computer
resources associated with various [defendant] software products”
(Filing No. 1, at 5-6).

This allegation does not identify the

offending product as a CD-ROM at all, much less exclusively so.
Similarly, Prism has previously identified a CD-ROM as
one possible hardware key, but has not identified a CD-ROM as the
exclusive embodiment of a hardware key.

For example, at the

hearing of the parties on August 4, 2011, the following colloquy
was had between the Court and Prism’s counsel:
THE COURT: Is it your claim that
the CD-ROM itself is an external
hardware key?
MR. BANYS: Yes, it is, Your Honor.
In many instances, anyway. We do
have multiple defendants with
multiple products.
(Filing No. 218, at 17:17-21).
Yet defendants maintain that the idea that the hardware
key could be something other than a CD-ROM is “an entirely new
infringement theory” that Prism only advanced for the first time
“in supplemental interrogatory responses served three weeks after
Defendants filed their Motion” for summary judgment (Filing No.
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368, at 6, emphasis omitted).

This argument only holds water if

defendants can show that Prism unequivocally boxed itself into a
CD-ROM-only argument; defendants have not succeeded in doing so.
Thus, if the possibility of the existence of a hardware key
exists, then, at a minimum, the other terms in this Court’s
construction of the term “hardware key” are relevant to the
determination of infringement, making further claim construction
necessary to decide the issue.

The Court finds that there is

considerable dispute as to the material facts regarding
infringement in this case and that the dispute may be at least
partially resolved by a second Markman claim construction hearing
in January 2012.
Prism’s second argument in favor of the contention that
defendants’ motion for summary judgment is premature concerns
defendants’ alleged inadequate response to Prism’s discovery
requests (Filing No. 334, at 31).

Prism details what it sees as

the inadequacy of defendants’ responses, for example, claiming
that “as of the date they moved for summary judgment, Defendants
McAfee, Symantec, and MathWorks had yet to produce a single
document” (Id.).

The parties disagree as to whether discovery

requests are being adequately and promptly met.

Prism maintains

that discovery requests are ignored; defendants claim that
discovery requests are for voluminous, irrelevant materials, and
that further discovery would be “fruitless” in any event.

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However, the Court is persuaded by Prism’s contention
that “[i]n a case involving authentication and security, it
should come as no surprise that much of the technical information
Prism needs to ultimately prove its case resides [with] and is
kept confidential by Defendants” (Filing No. 334, at 34).

Prism

claims that “by refusing to comply with discovery while at the
same time moving for summary judgment, Defendants have
effectively prevented Prism from defending itself.

This is

precisely why Fed. R. Civ. P. 56(d) exists” (Id.).
The Court finds that Prism is entitled to a
postponement of the ruling on defendants’ motion for summary
judgment so that Prism may proceed with discovery.

Defendants’

motion for summary judgment will be denied, without prejudice,
with leave to re-file following the issuance of the Court’s
memorandum and order as to claim construction, subsequent to the
January 2012 hearing.

Prism’s motion to strike or, in the

alternative, to file surreply brief (Filing No. 376) will be
denied as moot.

Accordingly,

IT IS ORDERED:
1) Defendants’ motion for summary judgment (Filing No.
288) is denied, without prejudice, with leave to re-file
following the issuance of the Court’s memorandum and order as to
claim construction, subsequent to the January 2012 hearing; and

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2) Prism’s motion to strike or, in the alternative, to
file surreply brief (Filing No. 376) is denied as moot.
DATED this 28th day of November, 2011.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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