Prism Technologies v. AT&T et al

Filing 417

MEMORANDUM AND ORDER denying (255) Motion to Exclude in case 8:12-cv-00122-LES-TDT; denying (216) Motion to Exclude in case 8:12-cv-00123-LES-TDT; denying (229) Motion to Exclude in case 8:12-cv-00124-LES-TDT; denying (209) Motion to Exclude in case 8:12-cv-00125-LES-TDT; denying (199) Motion to Exclude in case 8:12-cv-00126-LES-TDT. Ordered by Senior Judge Lyle E. Strom. (ADB, )

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

)
)
Plaintiff,
)
)
v.
)
)
AT&T MOBILITY, LLC,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
SPRINT SPECTRUM L.P.,
)
d/b/a SPRINT PCS,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
T-MOBILE USA, INC.,
)
)
Defendant.
)
______________________________)
PRISM TECHNOLOGIES LLC,
)
)
Plaintiff,
)
)
v.
)
)
UNITED STATES CELLULAR
)
CORPORATION, d/b/a U.S.
)
CELLULAR,
)
)
Defendant.
)
______________________________)

8:12CV122

MEMORANDUM AND ORDER

8:12CV123

8:12CV124

8:12CV125

PRISM TECHNOLOGIES LLC,

)
)
Plaintiff,
)
)
v.
)
)
CELLCO PARTNERSHIP d/b/a
)
VERIZON WIRELESS,
)
)
Defendant.
)
______________________________)

8:12CV126

This matter is before the Court on the common Daubert
motions (Filing No. 255 in 8:12CV122; Filing No. 216 in
8:12CV123; Filing No. 229 in 8:12CV124; Filing No. 209 in
8:12CV125; Filing No. 199 in 8:12CV126)1 of the five defendants
in five separate cases.

Pursuant to Section 299 of Title 35,

plaintiff Prism Technologies, L.L.C. (“Prism”) opted to file
separate actions against common alleged infringers of its patents
(35 U.S.C. § 299(a), (b); Filing No. 135).

In the interest of

judicial economy, the parties agreed to allow the filing of
“common motions for summary judgment” and “common Daubert
motions” by the Defendants, AT&T Mobility L.L.C., Sprint Spectrum
L.P., T-Mobile U.S.A., Inc., United States Cellular Corporation
d/b/a U.S. Cellular, and Cellco Partnership d/b/a Verizon
Wireless (referred to heretofore as the “defendants”) (Filing No.

1

For ease of citation, the Court will refer to the filings in
the AT&T Mobility L.L.C. case (8:12CV122).
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226).

The defendants filed the current common Daubert motion to

exclude the opinions and testimony of John Minor (“Minor”).

The

matter has been fully briefed and is ready for disposition
(Filing No. 259, Filing No. 334, Filing No. 365).

After review

of the motion, briefs, indices of evidence, and relevant case
law, the Court finds as follows.
I.

BACKGROUND
Originally, Prism alleged infringement of three

asserted patents (Filing No. 1).

Ultimately, Prism narrowed the

scope of this action to two patents:

U.S. Patent No. 8,127,345

(“Patent ‘345") and U.S. Patent No. 8,387,155 (“Patent ‘155")
(Filing No. 1; Filing No. 242, 9; Filing No. 243-4, 3; Filing No.
243-5, 2).

Prism dropped its third asserted patent, U.S. Patent

7,290,288 (“Patent ‘288"), from this action (Id.).
The United States Patent and Trademark Office (“PTO”)
issued Patent ‘345, entitled “METHOD AND SYSTEM FOR MANAGING
ACCESS TO PROTECTED COMPUTER RESOURCES VIA AN INTERNET PROTOCOL
NETWORK,” on February 28, 2012, from an application filed October
30, 2007 (Filing No. 1-6, at 1).

Patent‘345 is allegedly a

continuation of Patent ‘288, entitled “METHOD AND SYSTEM FOR
CONTROLLING ACCESS, BY AN AUTHENTICATION SERVER, TO PROTECTED
COMPUTER RESOURCES PROVIDED VIA AN INTERNET PROTOCOL NETWORK” and
filed on August 29, 2002 (Id.).
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The PTO issued Patent ‘155, entitled “SYSTEM FOR
MANAGING ACCESS TO PROTECTED COMPUTER RESOURCES,” on February 26,
2013, from an application filed November 11, 2010, with the PTO.
Prism contends that the Patent ‘155 application was a
continuation of the Patent ‘345 application.
Prism has a fourth, unasserted patent, U.S. Patent No.
6,516,416 (“‘416 Patent”), entitled “SUBSCRIPTION ACCESS SYSTEM
FOR USE WITH AN UNTRUSTED NETWORK.”

The Court has referenced

this patent in its prior orders (E.g., Filing No. 132).
B.

PROCEDURE
On April 4, 2012, Prism filed its complaints against

AT&T and various other cellular phone providers in separate
actions, alleging direct infringement, indirect contributory
infringement, and indirect inducement of infringement of Patents
‘345 and ‘155 (Filing No. 1, 85).

The complaint was amended

September 21, 2012 (Filing No. 40) and March 1, 2013 (Filing No.
85).

On April 23, 2013, the parties submitted a Joint Claim

Construction Statement and the Court conducted a Markman hearing
on July 2, 2013 (Filing Nos. 110, 130).

The Court issued its

Markman order on July 30, 2013, accepting jointly stipulated
terms and construing disputed terms (Filing No. 132).
An integral construction in the Markman order was the
term “Internet Protocol Network” (hereinafter “IPN”), which
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appears ubiquitously in the asserted claims (Patent ‘345 claim
Nos. 1, 50; Patent ‘155 claim Nos. 50, 56, 74).

The Court

construed IPN to mean “an untrusted network using any protocol of
the Internet Protocol Suite including at least one of IP, TCP/IP,
UDP/IP, HTTP, and HTTP/IP . . .”

(Filing No. 132, at 12-30).

The Court further defined “untrusted” as “a public network with
no controlling organization, with the path to access the network
being undefined and the user being anonymous.” (Id.).
Prism has retained experts to testify and offer
testimony and opinions at trial regarding damages and the systems
in this case.

The parties submitted their briefs and a Daubert

hearing was held August 27, 2014.

Minor will offer the

following, paraphrased, expert opinions at trial:
1. The cost for the defendants to
build a backhaul2 is two to five
times more than each defendant
spends on leasing a backhaul.
2. The Court’s Markman order
construes IPN to mean in part “a
public network with no single
controlling organization.”
3. The defendants’ backhauls
constitute IPNs.

2

The backhaul is a physical infrastructure which the defendant
does not own but rather leases from third parties under strict
contractual terms.
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The defendants first move to exclude those sections within
Minor’s report where he estimates the costs of the backhaul.

The

defendants then move to exclude Minor’s testimony regarding his
interpretation of Internet Protocol Network and whether the
defendants’ backhaul constitute the Internet Protocol Networks.
II.

STANDARD OF REVIEW
This Court must determine whether Minor’s specialized

knowledge will assist the trier of fact to understand evidence or
to determine a fact in issue.

Fed. R. Evid. 702.

Under Rule

702, the Court must consider whether (1) the testimony is based
upon sufficient facts or data, (2) the testimony is the product
of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the
case.

The Court’s role is to act as a gatekeeper, excluding

evidence if it is based upon unreliable principles or methods, or
legally insufficient facts and data and must be sufficiently tied
to the facts of the case that it will aid the jury in resolving a
factual dispute.

Daubert, 509 U.S. at 595.

The Court is mindful not to overstep its gatekeeping
role and weigh facts, evaluate the correctness of conclusions,
impose its own preferred methodology, or judge credibility,
including the credibility of one expert over another.

Apple,

Inc. v. Motorola, Inc., 757 F.3d 1286, 1314 (Fed. Cir. 2014)
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(citing Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th Cir.
2000).

These tasks are solely reserved for the fact finder.

citing Smith, 215 F.3d at 718.

Id.

The proponent of the expert

testimony must prove its admissibility by a preponderance of the
evidence.

Daubert, 509 U.S. at 592-93, n.10.

III. DISCUSSION
The defendants’ arguments against Minor’s opinion and
testimony is two fold.

First, the defendants object to the

sufficiency of the evidence upon which Minor relied to establish
the basis of his estimations.

Filing No. 334, at 6-7.

Second,

the defendants argue that Minor deliberately modified the term
IPN, disregarding the Court’s Markman order.
A.

Id.

SUFFICIENCY
Minor has experience creating and leasing backhaul

systems.

The defendants primarily object to the fact that his

experience is not specifically in creating and leasing backhaul
systems in the cellular industry.

Filing No. 634, at 8.

The

Court finds that Minor’s experience is sufficiently specific to
the facts in this case to allow Minor to rely upon his
experience.

The Court also finds the distinction between

“cellular backhauls” and “other backhauls” does not invalidate
Minor’s experience as it relates to this case.
best made in cross examination.
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This argument is

The Court also finds Minor reasonably relied upon
quantitative analyses.

To the extent these reports fail to

incorporate specific issues for the defendants, the defendants
may bring that issue to the jury’s attention at trial.
Finally, the defendants raise an interesting issue as
to whether Prism is shifting its burden from its damages expert
to its technical expert in order to circumvent the scientific
requirements of calculating damages.

Though Minor’s opinion is

the integral piece of Prism’s damages model, the Court will
exclude Prism’s damages model in its entirety, so the Court will
not address this final issue.
B.

MARKMAN
Below is a visualization of the parties’ argument

regarding the interpretation of untrusted:
Minor’s interpretation

The Court’s Markman order

“a public network with no

“a public network with no

single controlling

controlling organization, with

organization, with the path to

the path to access the network

access the network being

being undefined and the user

undefined and the user being

being anonymous.”

anonymous.”
The effect of this distinction is significant and potentially
dispositive.

If Minor’s reading is correct, only a single
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organization may “control” a network in order to constitute a
trusted network.

Prism argues, because the defendants share

control with multiple other organizations, there is no single
controlling organization and the defendants’ networks are
untrusted and therefore infringe.
If Minor is incorrect, one or more organizations may
“control” a network.

Any controlling organization in a public

network, whether singular or plural, is not an untrusted network
and the defendants’ networks, therefore, are trusted and do not
infringe.
The parties concur on two issues.

First, control

exists at every level of the defendants’ networks.

Second, the

internet is the preferred embodiment of the Asserted Patents.
The Court is mindful that experts are permitted to reasonably
disagree as to the interpretation and application of the Court’s
Markman order.

However, they must not “cross[] the line by

asserting claim constructions that are contrary to the court’s
[construction].”

Transamerica Life Ins. Co. v. Lincoln Nat'l

Life Ins. Co., 597 F. Supp. 2d 897, 910 (N.D. Iowa 2009) (citing
Kemin Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V.,
4:02CV40327, 2004 WL 5508752, *4 (S.D. Iowa Sept. 9, 2004)).

The

issue is whether Minor’s interpretation of the Markman order is
inapposite or merely germane to the order.
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Minor interpreted the Markman order in light of the
“internet,” the preferred embodiment of untrusted network in the
Asserted Patents.

Filing No. 334, at 23.

The internet,

according to Minor, is a “network-of-networks with many of the
individual constituent components privately owned and controlled,
but in the aggregate there is no controlling organization.”
Prism argues that because the defendants do not solely own all
the portions of their networks, those networks constitute the
internet -- an untrusted network.

If the defendants purchases

all the leased backhaul, then their networks would be trusted and
not the internet.
First, the Court disregards Prism’s argument that the
defendants’ experts have adopted Minor’s interpretation.

It is

merely an ostensible misconstruction of the experts’ testimony.
See Filing No. 334, at 25 (focusing solely on “no one
organization” but ignoring “or organizations”).
Prism’s primary argument is that the defendants’
verbatim interpretation of the Markman order excludes the
“internet.”

Id. at 24-26.

The parties agree that the connection

of all networks in the world is the public, uncontrolled,
undefined pathway, anonymous-user aggregated internet.

The

parties agree portions of the aggregate internet may be
controlled, but no single organization controls all of the
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aggregate internet.

The question is whether the defendants’

networks, over which each exert an arguable level of control, can
likewise constitute a public, uncontrolled, undefined pathway,
anonymous-user internet like the aggregated internet.

When does

an organization exert sufficient control over its network in
order for it to be trusted?

This is a question of fact and the

Court will not determine whether the defendants’ networks exert
sufficient control over the backhaul.

The Court finds Minor’s

interpretation of the control element of untrusted does not stand
inapposite of the Markman hearing and he may rely upon it at
trial.
IT IS ORDERED that the defendants’ motions (Filing No.
255 in 8:12CV122; Filing No. 216 in 8:12CV123; Filing No. 229 in
8:12CV124; Filing No. 209 in 8:12CV125; Filing No. 199 in
8:12CV126) are denied.
DATED this 29th day of September, 2014.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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