Touchtunes Music Corp. v. Rowe International Corp. et al

Filing 209

OPINION: #101558 For the reasons set forth in this opinion, the disputed claim terms are given the definitions set forth in this opinion and TouchTunes' motion to amend is granted. It is so ordered. Re: 201 MOTION to Amend/Correct 1 Complaint, filed by Touchtunes Music Corp. (Signed by Judge Robert W. Sweet on 3/13/2012) (rjm) Modified on 3/14/2012 (rjm). Modified on 3/14/2012 (jab).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

---- -x
TOUCHTUNES MUSIC CORP.,
07 Civ. 11450

Plaintiff,
-against

OPINION
ROWE INTERNATIONAL CORP., ARACHNID,
INC., AMI ENTERTAINMENT, INC. and
MERIT INDUSTRIES, INC. albia MERIT
ENTERTAINMENT,
Defendants.

---x
ARACHNID / INC. /
Counterclaim Plaintiff[
-againstTOUCHTUNES MUSIC CORP. [
Counterclaim Defendant.

--------x
A P PEA RAN C E S:
Attorneys for Plaintiff
TouchTunes Music
NIXON & VANDERHYE, P.C.
901 North Glebe Road, Suite 1100
Arlington[ VA 22203
Joseph S. Presta[ Esq.
Jonathan T. Reavill, Esq.
KAYE SCHOLER LLP
425 Park Avenue
New York, NY 10022-3589
By: James S. Blank, Esq.

Attorneys for Defendant
Arachnid, Inc.
McANDREWS, HELD & MALLOY, LTD.

500 West Madison, 34th Floor

Chicago, IL 60661

By: James P. Murphy,

Paul W. McAndrews,

Sweet, D.J.

aintiff
or

iff")

"PI

TouchTunes

filed

Music

instant

Corporation

("TouchTunes"

ringement

patent

action

seeking a declaratory judgment of noninfringement and invali
of

software

jukeboxes

patents

in

largely

electronic

and Counterclaimant Arachnid

owned by De

l

used

l

("Arachnid")
TouchTunes

l

patents.

TouchTunes

l

Inc.

l

as well as a finding of infringement of ce
Arachnid

has

counterclaimed

of
alleging

infringement as to five of its patents.

Presently at issue is the construction cert
with

respect

TouchTunes

Patent No.

to

one

of

the

patents

that

is

claims and Arachnid/s counterclaims t

l

6 / 191 / 780

(the "' 780 Patent").

v. Westview Instruments Inc.
----~~~------------------~-----have submitted brief
di

ty

1

517 U. S.

subject

of

Arachnid/s U.S.

Pursuant to Markman
(1996)

1

parties

regarding their proposed construction of

ed claim terms with respect to

On

370

the

claims

September

21

2011 1

'780 Patent.

TouchTunes

sought

leave

under

Rules 15(a) and 16(b) of the Fede

Rules of Civil Procedure to

amend the

for

compla

to

add

claims

to inequitable conduct.

1

patent

unenforceability

Oral

argument

on

the

motion

to

amend

was

heard

in

conjunction with a Markman hearing on the '780 Patent on October
18, 2011.

The Court's construction of the disputed claim terms
is

set

forth

below

and,

for

the

reasons

below,

TouchTunes'

motion to amend is granted.

I.

PRIOR PROCEEDINGS

On December 20,

TouchTunes filed

its complaint

alleging that defendants Rowe International Corp.

("Rowe"), AMI

Entertainment,
the

"Rowe

Inc.,

2007,

and Merit

Industries,

infringed

three

TouchTunes

Patents.

Defendants")

so

a

noninfringement
Arachnid.

and

sought

invalidity

On February 15,

of

2008,

Inc.
of

(collect i vely,

TouchTunes'

declaratory

certain

judgment

patents

owned

U.S.
of
by

Arachnid counterclaimed that

TouchTunes infringed four of those patents.

In
Defendants

or

about

entered

April

into

which TouchTunes' affirmat
and

its

declaratory

a

2009,

TouchTunes

settlement

and

agreement,

the

pursuant

Rowe
to

claims against the Rowe Defendants

judgment

action

smissed.
2

against

Rowe

were

both

Arachnid moved for a transfer of venue and to stay the
proceedings
Arachnid's

pending
patents,

the
both

ex parte
of

which

reexamination
were

denied

of

certain

by

an

opinion

filed December 15, 2009.

On

March

19,

2010,

TouchTunes

filed

a

motion

for

summary judgment and oral argument was heard on May 26, 2010.

On March 23, 2010, the Court held a Markman hearing to
address issues of construction

certa

terms of the claims-

in-suit.

Following the Court's grant

of Arachnid's motion

leave to file a first amended answer and counterclaim on May 11,
2010, Arachnid added a fifth patent to its counterclaims on May
14, 2010.

By

opinion

opinion construing

of

July

21,

2010,

the

Court

issued

an

claims subject to the March, 2010 Markman

hearing.

By opinion of October 5,
summary judgment was denied.
3

2010, TouchTunes'

motion for

On

April

7,

2011,

Patent No.

6,397,189

5,848,398

("the

'398

("the

'189

Patent"),

Patent") i

'575

filed

a

motion

for

noninfringement regarding Arachnid's

partial summary judgment
U.S.

TouchTunes

U.S.

and

U.S.

Patent

31,

2011,

the

Patent"),
Patent No.

U.S.

6,381,575

("the

( "the

'765

5,930,765

No.

Patent No.

Patent") .

On May
rendering
and

TouchTunes'

providing,

motion

Court

inter
- - - - -ia,
-

ordered

a

partial

for

so

summary

judgment

that

(1)

aims

1-7

stipulation

of

moot

the

'398

Patent had been found invalid;

(2)

TouchTunes had not infringed

any claim of

the

'189 Patent;

(3)

TouchTunes had not

any claim of

the

'575 Patent;

(4)

dismissing without prejudice

TouchTunes'
(5)
to

claims with regard to

dismissing without prejud
the

'765

Patent

in

light

'189 and
TouchTunes'

of Arachnid's

infringed

'575 Patents; and

claims with regard
stipulation that

will not assert a claim against TouchTunes al

ing

it

ringement

of the '765 Patent.

On
amend

the

September

complaint

to

2,
add

2011,

TouchTunes

claims

due to inequitable conduct.

4

for

filed

patent

a

motion

to

unenforceability

That

motion

and

the

claim

construction

briefing

regarding the '780 Patent were marked fully submitted on October
18, 2011 following oral argument and the Markman hearing.

Familiarity

with

the

facts

of

this

dispute

are

assumed.

II.
THE LEGAL
CONSTRUCTION

FRAMEWORK

AND

APPLICABLE

STANDARD

FOR

Claim construction is an issue of law to
by

t

Markman,

court.

meaning of cIa
their

ordinary

terms,
and

517 U.S.

at 385.

as

of

"words of a claim 'are generally given

customary

the

meaning'lf

(Fed. Cir. 2005)

effective

Phill

application."

determined

In interpreting the

as

understood

person of ordinary skill in the art at the t
i. e. ,

CLAIM

v.

(en banc)

filing

415

"a

of invention,

date

.,

AWH

by

of

F.3d

(citations omitted).

the

patent

1303,

1312 13

The court reads

a claim term "not only in the context of the particular claim in
which

the

disputed

term

appears,

but

in

the

entire patent, including the specification."

Federal Ci
\I

intrinsic"

claim

evidence

themselves,

t

construct

written
5

description

of

the

Id. at 1313.

has emphasized the

in claim

the

context

the
in

importance of
words
the

of

the

patent's

specification,

and,

when necessary,

the history of

application's prosecution before the U. S.
Office (the "PTO").

the patent

Patent and Trademark

Id. at 1314-17.

process

of

claim

construction

language of the claims themselves,

begins

with

which the patentee selected

to "'particularly point[] out and dist

tly claim[] the subject

matter which the applicant regards as his invention.'"
1311-12

(quoting 35 U.S.C.

provide

substanti

claim terms."
being

112)

§

guidance

Id. at 1314.

examined,

the

as

the

Thus,
to

the

Id.

at

claims themselves

"

meaning

of

particular

In addition to the particular claim

context

provided

by

other

claims

may

be

helpful as well.

Claim language must also be
specification.

Id.

at

1315.

The

in the context of the
specification

"'is

highly relevant to the claim construction analysis.

always

Usually it

is dispositive; it is the single best guide to the meaning
disputed term.'"
Inc.,

Id.

90 F.3d 1576,

"act[s]

as

his

or

(quoting

1582

(Fed.

her

own

_V_i~t~r~o~n~i.c~~s ~~~~~~~~~~~~~
__

Cir.
I

1996))

cographer"

When the patentee
and

includes

explicit definition of a claim term in the specification,
definition is

sposit

a

Id. at 1319 (citation omitted)

specification also acts as a dictionary "when it def
6

an
that
The

terms

by

implication.

Vitronics

II

90

i

F.3d

at

However I

1582.

relying on the specification to interpret claim terms l
should

not

be

confined

specification.

Phill

1

tation

to

"reading
aims ll
1320

a
is

"one of

the

415

F.3d

the

patent
v.

historYI

if

it

quotation marks
inform the
the

is

in

law.

If

11I

).

prosecution history

omitt

the

The

Id.

at

claim language

1317

(citations omitted).

I

the

we have

(citations

ongoing

clarity

l

inventor

making
Id.

at 1317

"because the prosecution history

negotiation

between

the

PTO

and

final product of that negotiation
the

and

"can often

invention and whether the

However I

rather than

often lacks

at

by demonstrating how

claim scope narrower than it would otherwise be."

applicant

Id.

r. 2001)).

1340 (Fed.

invention in the course of prosecution

an

of

Advanced Cardiovascular

evidence.

inventor understood

represents

the

'should also consider the patent's prosecution

meaning of

limited the

In

into

"In addition to consulting the specification l
held that a court

court

mistake

description

Inc.
1

The

1323.

sins

cardinal

242 F.3d 1337

l

at

described

written

from

(quoting

SYS'I Inc'

embodiments

a

when

specification and thus

useful for claim construction purposes.

7

1f

Id.

is

the
l

it

less

Finally,
as dictionaries,
may

serve

as

a

courts may rely on "extrinsic" evidence such
learned treatises,

source

of

and expert testimony,

"accepted meanings

of

terms

which

used

in

various fields of science and technology" or provide "background
on the

technology at

issue.

extrinsic

evidence

record

determining

in

language, "
intrinsic
marks

and

is

evidence.

omitted) i

also
1302

1

at

1317-18.

significant

legally

be
Id.

see

Inc., 423 F.3d 1296

"less
the

should

Id.

tI

at

in

1317-19

Bi

W.

than

operative

considered

However
the

Sales

of

context

(citations

such

intrinsic

meaning

the

1

and

claim

of

the

quotation

Inc.

v.

Grow More

'780

Patent

--~~------------~------------------------~

(Fed. Cir. 2005).

III. THE DISPUTED CLAIM TERMS

The

disputed

follows:

"multimedia

"control

segment,

argument,

the

sequence

association

ll
l

terms

segment

of

the

structure

"definition segment,

"argument

If

"customizing
"play

If

claim

definition

predefined
listing

of

1

"mul timedia

II

II

def

as

effect,

II

"placeholder tokenized

the

advertisement

the

are

tokenized
for

tion

argument,

local

segment,

II

II

display,

II

"segment

"memory" and "literal argument."

The primary relevant claim language
and 9, is as follows:
8

1

found in claims 1

1. An
ectronic device for executing a
advertisement multimedia display/ the
device comprising:

customized
electronic

a memory storing a multimedia segment structure/ the
multimedia segment structure comprising:
a. a control segment implementing a predefined
advertisement
and
comprising
at
least
one
multimedia command invoking at least one multimedia
effect/
multimedia
command
including
a
placeholder tokenized argumenti and
b. a
definition
segment
comprising
a
segment
association invoking the control segment and an
argument definition of the tokenized argument/ the
argument
definition customizing the
predefined
advertisement for local displaYi
memory also storing a play sequence listing the
definition segment and thereby
termining when the
multimedia segment structure is executedi
and
a

processor for executing the multimedia segment
structure in accordance with the play sequence.

***
9. The electronic device of claim 1/ wherein the
control
segment
further
comprises
a
second
multimedia command with a literal argument.
('780 Patent claims 1 & 9 (Dkt No. 192-1.))

A.

Multimedia Segment Structure

9

construction

the

structure

segment

"multimedia

of

structure

and

ll

The parties agree that that a "multimedia

"multimedia effect.1I
segment

ct to

are largely in agreement with re

The part

is

ll

a

portion

s

mul timedia display. 1

of

a

program

is stated in the

defining

'780

a

Patent:

present invention relates generally to a segment structure which
allows

electronic

devices

to

generate

multimedia

di

ays."

('780 Patent 1:4 7i see also id. at 2:14-27.)

parties disagree with respect
"multimedia."

TouchTunes argues that

the prefix

"multi ,

ff

means

that

least

different

types

of

two

the
media.

TouchTunes points to a dictionary def
includes the following language:

to the meaning of

"mul t i media,
di

ay must
For

by dint of

ff

comprise

this

at

proposition

tion and that the patent

" [s] till a further obj ect of

present invention is to provide a mechanism for downloading
and storing multimedia displays defined by a multimedia segment
structure as well as executing the multimedia segment structure
to generate the multimedia displays on a di
the

like associ

2:22-28i

see

also

with
id.

speakers, and

electronic device.
at

1:25-28

("Any

including even rudimentary audio, video, or

fI

('

780

electronic

patent
device

effects may be

Touchtunes uses the term "presentation" instead of "display." These
terms presumably have identical
However, as "display" is used in
the patent, the Court adopts that term.

10

used

to

communicate

informat ion,

via multimedia presentations."),
"ordered
device

sequences

to

generate
and

display,

of

may

or

(including,

or

external

contends

that

inter alia,

the

other

flags, alarms and the like connected to the

Arachnid

advert isements,

instruct

circles,

internal

example,

4:34-42

commands

lines,

control

for

electronic

graphics

on

a

buzzers,

lights,

ectronic device.")

"multimedia"

indicates

the

capability of presenting multiple forms of media, one or more at
a

time,

not

that

simultaneously

multiple,

presented.

different
Arachnid

forms
argues

of

media

that

its

must
proposed

construction is consistent with the patent specification,
identif

which

s several exemplary "multimedia commands" each of which

displays a single media form,

and with the pIa

term.

to

Arachnid

also

points

Storer for the proposition that

the

meaning of the

declaration

of

Dr.

James

its construction is consistent

with the understanding of a person of ordinary skill in the art.
(See Storer Decl. 7 (Dkt. No. 192 3).)

The preferred embodiment disclosed in the
shows

a

"CIRCLE,"

control

segment

"LINE," and "TEXT."

see also id. at 2:62 3:3

with

three

multimedia

('780 Patent Figure 2,

'780 Patent
commands,
4:55

(describing various media forms).)

of these commands presents one form of media.
11

5:30j

Each

To construe the

"multimedia"
media

must

urges,

to

require

be

incorrect

embodiments of the
rejected.
503

at

least

simultaneously

always

would

that

two

different

presented,
would

because

as

forms

TouchTunes

exclude

preferred

This construction is therefore

'780 Patent.

.,

See verizon Servs.

F.3d

1295,

1305

of

2007)

(Fed.

("We

normally

do

not

interpret claim terms in a way that excludes disclosed examples
in

the

Inc.,

specification.")

451 F.3d 841,

normally

848

(stating a
"is rarely,

claim

(citation

II

Inc.

term

omitted»;

construction that

to

.

exclude

Vitrionics,

excludes

consistent

"multimedia,"

"multimedia segment

"a portion

a program

graphics,

(" [W] e

the

Specialties

90

should not

a

preferred

F.3d

at

1583

preferred embodiment

(citations omitted».

Accordingly,

content

Hunter's

if ever correct and would require highly persuasive

evidentiary support"

multimedia

v.

(Fed. Cir. 2006)

a

interpret

embodiment.

Primos

display

forms,

one

with

a

display

or

more

at

a

images, or text."

12

ordinary meaning

structure"

fining a

is

the

is construed to be

multimedia display,
which
time,

of

can
such

where a

present
as

audio

mult
I

e

video,

B.

Multimedia Effect

As

with

"multimedia

segment

structure,

parties

II

agreement and disagree only as to the meaning of

are largely
"multimedia.

The parties agree that "multimedia ef

II

media, and Arachnid proposes that

ay

di

be construed as

ct" should

this be "the display of any type of multimedia content,
audio, video, graphics,
that

this

term

be

images, or textll while TouchTunes argues

defined

different types of media.

Arachnid's

this

proposed

term refers

claim language states,
multimedia effect."
would

render

the

as

"the

display

at

least

two

1I

the patent specification.
that

such as

construction

is

consistent

with

First, the claim language makes clear

to any

single media

form.

The

relevant

"multimedia command invoking at least one

('780 Patent 7:35-36.)
words

"at

least

one"

TouchTunes' proposal
superfluous.

A

claim

construction that renders claim language superfluous is almost
always
F.3d

incorrect.

1358,

scus

1362

See
(Fed.

TouchTunes'

Stumbo
eir.

v.

2007)

Eastman
In

508
addition,

as

earlier

construction would exclude the preferred

embodiment disclosed in the patent,

a construction that is "is

rarely, if ever correct.1I Vitrionics, 90 F.3d at 1583.

13

The term "multimedia effect" is therefore construed to
be

"the

display

of

media

content/

such

as

audio/

video/

graphics/ images, or text."

C.

Control Segment

TouchTunes
construed as
that
to

that

proposes

"the portion of

"control

the multimedia segment

implements the predefined advertisement.

define

the

commands

that

functions.

term as

"a portion of

segment

II

parties

multimedia

a

structure

Arachnid seeks

II

program that

are

in

effects

agreement

or

be

includes

II

The

invoke

segment"

perform

that

control

the

"control

is a portion of the "multimedia segment structure/" and

plain

claim

language/

the

patent

specification

and

the

prosecution history all make clear that this is the case.
e.
Ex .

fact

'780 patent at claim I, 2:39-51, 3:18-22, 4:20-25/
6 at 6,

should

"control

1 0 - 13 . )
be

reflected

segment /'/

"multimedia

The parties disagree, however/ whether this

segment

in

the

construction

with Arachnid arguing that
structure/'

is

argues it is necessary.

14

redundant

of

the

term

incorporation of
while

TouchTunes

structure

recite

claims

The

comprises

of

"a

that

the

control

multimedia

segment

implementing

segment

a

predefined advertisement and comprising at least one multimedia
command invoking at least one multimedia effect,
command

including

a

placeholder

tokeni

the multimedia

argument"

and

"a

definition segment comprising a segment association invoking the
control
argument,

segment
the

and

an

argument

argument

definition

definition

advertisement for local display."

of

customizing

the
the

tokenized
predefined

('780 Patent claim 1.)

In addition, during prosecution, Arachnid narrowed the
scope of the control segment to one "implementing a predefined
advertisement

and

comprising

at

least

invoking at least one multimedia effect
Ex. 6 at 6 (Dkt. No. 191-6.)

one

multimedia
1/

command

(Reavill Decl.

Arachnid argued to the PTO that:

Thus, as described in
specification, the control
segment is responsible
presenting a multimedia
presentation (e.g., for a predefined advertisement
template),
while
the
definition
segment
provides
definitions of tokenized arguments
the control file
that may be used to customize
(e.g.,
for local
distribution) the predefined advertisement template.
In addition, the amended claims now recite that
the
control
segment
implements
a
predefined
advertisement template using at least one multimedia
command with a tokenized argument.
A supporting
def
ional
segment
provides
customization
by
providing a locally modifiable definition for the
tokenized argument.

15

Thus,

(Id. at 10-11.)

the intrinsic evidence requires that the

control segment implement the predefined advertisement and that
the

definition

contain

segment

the

the

customization

predefined advertisement.

Because

a

reflects

that

is

structure

is

patent

it
in

construction
a

proportion

keeping

specification,

understanding of

of

the

plain

with
the

of

"cont

prosecution

parties,

multimedia
claim

segment

language,

history,

and serves

that

segment"

the
the

and

to clari

the term,

Court adopts that construction.

Next,

Arachnid's construction states that the control

segment

"includes

perform

control

commands

that

functions."

invoke

Due

to

multimedia
the

use

of

ts
"or,"

construction permits the invocation of multimedia ef
optional.
include

However,
a

command

invoke a multimedia effect.

and

(See, e.g.,

multimedia

this

ts to be

the claims require the control

multimedia

or

segment

to

command

to

'780 patent

aim Ii see

also Reavill Decl. Ex. 6 at 12.)

TouchTunes
construed as

proposal

"the portion of

that

"control

segment"

the multimedia segment

16

be

structure

implements

that

the

predefined

is

advertisement"

therefore

adopted.

D.

Definition Segment

TouchTunes proposes that the term \\defi
be construed as
distinct

from

tion segment"

\\a portion of the multimedia segment structure,
the

control

segment,

that

itself

customization for

proposes

Arachnid,

the predefined advertisement."

the

contains

other

hand,

that

the

portion of a program that provides a

term

be

def

construed

as

on
\\a

tion or definit

of tokenized arguments."

The parties agree
to define something.
be

construed

definition
f

as

whi

\\a

Arachnid proposes that definition segment
portion

TouchTunes

of

a

program"

proposes

to

that

provides

include

in

that

such
the

tion segment is part of the multimedia segment structure.

For largely
segment,

reasons

TouchTunes'

at

1,

set

forth with respect

inclusion

and in keeping with the
patent

the definition segment is used

i

2:39-51,

of

this

language

nsic evidence.
3:18-22,

Decl. Ex. 6 at 6, 10-11.)

17

to the control

4:20-25,

is

(See
Fig.

arifying
e.

.,

2i

Reavill

'780

addition,

In
definition
Whi

segment

the

"distinct

seeks

to

control

from

the control

that

add

the

segment.

lI

tion segments are

and def

that they must be distinct in every sense is

the claim language or specification and is contrary

not found

latter.

to

is

function of

clearly different,

TouchTunes

See '780 Patent 7:17 19 ("Furthermore, a control

segment and associated definition segments may be concatenat
o

a

single

file

purposes. ")

s

storage,

retrieval,

aspect of TouchTunes'

or

transmission

proposal

is therefore

rejected.

Accordingly,
construed to be

claim

term

"def ini t

segment"

is

"a portion of the mul timedia segment structure

contains

that

the

the

customization

for

the

predefined

advertisement."

E.

Wi
TouchTunes
"a fixed
a

Placeholder Tokenized Argument

respect
argues

to

that

this

i.e. non-variable)

definition

that

"placeholder

is

term

reference
itself

18

tokenized

should

argument,"

const

as

the multimedia command

contained

in

the

finition

segment,"

"an element

while Arachnid argues

in

a

command

representative of an actual argument."

whether

the

placeholder tokenized argument is fixed or may be variable.

The

The

primary

parties'

disagreement

is

parties agree that the prosecution history regarding Arachnid's
arguments as to the Liu reference bears on this point.

TouchTunes argues that the prosecution history of the
\780

Patent

underscores

that

placeholder

tokenized

between
definition.

TouchTunes

there

points

is

a

argument

out

that

issued claim 1

i.e.,

application claim 9)

argument"

"at

least

and

one

ct
and
its
rec

argument

relationship
the

argument

original

form,

ed "a tokenized

definintion

[s

corresponding to the tokenized argument."

(Reavill Decl.

Ex.

at 26-27

at 67.)

The PTO rej ect

rence,

patent

claim

(Dkt. No. 191-4), Ex.

in

view

of

karaoke system

the

Liu

re

6

(Dkt.

other

No.

191-5).)

things,

argument,"

as

7.)

In

sclosing

a

a

The

PTO

multimedia

well

as

"at

cited
command
least

(Reavill Decl. Ex. 5 at 6­
Liu

as

disclosing,

including

"a

one

corresponding to the tokenized argument."
at

the

which song lyrics are highlighted on a display

as the corresponding music is played.
7

a

4

response

to

that

rejection,
19

argument

tokenized
definition

(Reavill Decl.
Arachnid

among

Ex.

amended

5

the

claim to

add

that

the

tokenized

argument

was

a

"placeholder"

tokenized argument and distinguished Liu on that basis.
Decl.
only

Ex.

6

the

at

use

6,

of

a

12 -13.)

Arachnid argued

variable

"n"

and

that

that
such

(Reavill

Liu discloses
a

variable

1S

different than the claimed placeholder tokenized argument:

While Liu may use a counter (e. g., the variable 'n')
as an index into a set of lines, the claimed invention
recites
a
multimedia
command
with
placeholder
tokenized argument.
In other words,
the tokenized
argument is replaced by a definition for the tokenized
argument provided in the definition segment.
The
variable 'n' in Liu is not a placeholder because it
clearly must be maintained as a counter. This follows
from the fact that there is no replacement definition
or substitution for the variable
'n',
rather the
variable 'n' presumably indexes an array of strings
that vary in content as 'n' increments. The claimed
invention,
on the
other hand,
recites
that
the
tokenized argument is a placeholder in an actual
multimedia command for a definition provided in a
definition segment. The control segment / definition
segment structure thereby allows local operators to
modify
the
definition
segment
to
customize
advertisements for appropriate local display.

(Reavill Decl. Ex.

6 at 12-13.)

Arachnid amended the claims to

explicitly require that the argument definition contained in the
definition

segment

customize

the

predefined

advertisement.

(Reavill Decl. Ex. 6 at 7.)

Arachnid
argument

is

placeholder

not

argues
a

fixed

tokenized

that
value

argument

the
but

is
20

placeholder

instead
to

the

provide

tokenized

purpose

the

of

ability

a
to

change

its

value

to

modify

or

customize

what

displayed by the multimedia segment structure.
Patent 2 :45-50
more

(liThe

[def

tion]

definitions

argument

arguments used in the

ultimately

.,

See

'780

segment also includes one or

corresponding

[control]

1S

the

to

segments. Thus,

the

tokenized
[definition]

segment may customize a multimedia display by changing the value
of

the

argument.") ,

tokenized

[def ini tion]

segment

may

be

create custom advertisements

( liThe

5:49-52

modified

by

route

simply by changing

supporting
operators

to

values

the tokenized arguments in a definition segment.")

The part

s'

pos

ions are not fundament

ly at odds.

Arachnid is correct that placeholder tokenized arguments may be
replaced

by

customizable

Reavill Decl. Ex.

6 at 12

tokenized
(liAs claimed,

arguments.

See

the argument definition

customizes the predefined advertisement for local displ
In

other

words,

the

tokenized

argument

is

aced

by

a

definition for the tokenized argument provided in the definition
segment.")

'780 Patent states:

The [definition] segment also includes one or more
argument definitions corresponding to the tokenized
arguments used
the [control] segments. Thus, the
[definit
segment
may
customize
a
multimedia
display by changing the value of
the
tokenized
argument.
Note
the commands accept one or
more arguments, either in literal form (for example,
specifically naming text, XY locat
or filenames
21

as
"arachnid.bmp"), or in a tokenized form in which
identifiers
(for
example,
are
used
as
placeholders for an actual argument.
The
supporting [def
tion] segment may be modified by
route operators to create custom advertisements simply
by changing the values of the tokenized arguments in a
def
tion segment.
('780 Patent 2:45-50,
a

"placeholder"

abili

5:31-36,

tokenized

customize

to

An express purpose of

5:49 52.)

argument

the

is,

thus,

advertisement

to

provide

the

by

displ

the

multimedia segment structure.

At the same time, TouchTunes correctly points out that
Arachnid

limited

its

placeholder tokeni
a

fixed

language

in

light

of

value

that

can

Arachnid

calling

for

be

replaced

7).

In its

"at

ace,

t

one

Id.

Thus/

definition
se

predefined
the

claims

"corresponding

amendments

to

a

modifiable

aims to delete

argument

II

definit

11 Decl.

the tokeni zed argument.

Arachnid also added the limitation of
the

that

Ex.

6

Arachnid added the narrower requirement

"an argument definition

customizing

such

by

so amended the

corresponding to the tokenized argument.
at

Liu

argument is not a variable, as in Liu, but

argument definition.
the

claims

the

"the argument def

advertisement

local

no

"at

to"

longer
the

22

cover

tokeni

argument

II

def

tion

display.
least

argument.
tion

Id.) .

align

II

oneil
(rd.

with

Arachnid's distinction of Liu and the amendment
tokenized argument to a "placeholder."
13;

Reavill

arguments

Decl.

Ex.

regarding

8

at

See

" i d , at 7, 10

----'---=­

3. )

Arachnd's
between

relationship

narrowing the

amendments
the

and

placeholder

tokenized argument and the argument definition was significant.
The

PTO

specifically

noted

reference by amending

that

Arachnid

[issued claim 1]

"overcame

the

Liu

to include a placeholder

tokenized argument and explaining how placeholder was intended
to modify the
original);

claim."

see also,

F.3d 1361, 1372-73
that a

Reavill

Sea

Decl.

Ex.

Int'l

(Fed. Cir. 2005)

claim possesses a

feature

8

at

Inc. v.

3

(emphasis

C-COR Inc.,

in
413

("Where an applicant argues
that

the prior art does not

possess in order to overcome a prior art rejection, the argument
may

serve

language."

to

narrow

the

scope

of

otherwise

broad

claim

(citation omitted)).

Thus,

while a given placeholder tokenized argument is

fixed in the sense that is not a retained changing variable as
in Liu and can be replaced by only one argument definition
"TEST"

by

"This

is

a

test

message"),

what

that

argument

definition is can be changed.

For
tokeni zed

these

argument"

reasons,
as

"a

the

Court

construes

non variable
23

"placeholder

reference

in

the

command

multimedia

for

argument

customizable

single

a

definition."

F.

Argument Definition of the Tokenized Argument

TouchTunes

argues

that

"argument

definition

of

the

tokenized argument" should be construed as "a locally modifiable
definition that
and

that

is

replaces

itself
the

contained in the definition segment
placeholder

tokenized

argument

to

customize the predefined advertisement" and Arachnid argues this
term

should

be

construed

as

"a

finition

for

the

tokenized

the

argument

argument provided in the definition segment."

The
definition

of

part
the

tokenized argument
segment.
for

a

generally
tokenized
and that

agree

argument

that

defines

the

it is contained in the definition

The placeholder tokenized argument is a

modifiable

customized.

value,

placeholder

which

lows

the

"placeholder"

advertisement

The definition provides the value that

to

timately

is used in place of the placeholder.

However,

TouchTunes

argues

that

Arachnid's

construction fails to recognize that the argument definition is
the value that replaces the tokenized argument to customize the
24

In TouchTunes' view, under Arachnid's

predefined advertisement.

proposal, the argument definition could be one of many available
definitions

multimedia

the

ln

As discussed above,

tokeni zed argument.
demonstrates

that

the

argument

for

structure

segment

the

definition

intrinsic
contained

the

record
in

the

definition segment provides the customization that replaces the
placeholder
2:39 51,

tokenized

5:32 62,

6:10-21;

definitional

supporting
providing

argument.

a

See

\780

patent

at

claim

Reavill Decl. Ex. 6 at 6 7, 10-13
segment

provides

customization

1,
(\\A
by

locally

modifiable

definition

for

the

tokenized

Accordingly

\\argument

definition

of

the

tokenized

argument. ") . )

argument"

is construed as \\a modifiable definition contained in

the definition segment that

replaces

the placeholder tokenized

argument."

G.

Customizing the Predefined Advertisement for
Local Display

TouchTunes
advertisement

for

contends
local

"modifying

the

predefined

customized

information

that

\\customizing

display"

should

advertisement

regarding

25

the

so

local

the

be
that
area

predefined

construed
it

as

provides

in which

the

device

is located.
to

read

to

allow

this term should be
of

attribute(s)

"modifying

be

advertisement

Arachnid argues that

II

information

predefined

the

displayed

to

to

a

particular location(s) or device(s).11

The

parties'

regards whether the

central

disagreement

over

customized information must

this
to

the

The claim language it

local area in which it is displayed.

relate

f

does not limit customization to information regarding
areas.

In

a

preferred

"TEST::: 'This

definition

embodiment,

is

test

a

term

the

local

single

message'"

argument

modifies

the

predefined advertisement by modifying the text which will appear
in

the

text

box

multimedia

segment

customizes

for

from

local

the

preferred

on

.,

local
area.

('780

splay but

and

as

such

device

Patent

does

TouchTunes'

503 F. 3d at 1305;

.,

trionics

particular

structure.

embodiment

Servs.

that

not

Figure
contain

proposal
is

2.)

this
This

information

would

rejected.

Primos Inc.,

90 F. 3d at 1583

running

exclude
See

a

Verizon

451 F. 3d at 848 i

(a construction that excludes

the preferred embodiment "is rarely, if ever correct") .

TouchTunes' proposal additionally reads into the claim
construction an embodiment described in the patent,
the

"Tony's

Pizza"

example described
26

at

column 6

specifically
the

'780

Patent,

which

However,

"it

does

include

information

from

is improper to read limitations
the specification -

embodiment described
only embodiment -

the

local

area.

from a preferred

even if it is the

into the claims absent a clear indication in

the intrinsic record that the patentee intended the claims to be
so
898,
t

limited."
913

ebel Flarsheim Co.
....
..

~~~~~~

(Fed. Cir.

v.

Medrad

Inc.,

358

~~~~ ~~~~~~~~~~~.. ~------

F. 3d

No such clear indication exists in

2004)

intrinsic record.

Therefore,

"customizing

the

predefined

advertisement

for local display" is construed in keeping with the plain claim
language as "modifying the predefined advertisement so that it
provides customized information to be displayed to a particular
location(s) ."

H.

Play Sequence Listing the Definition Segment

TouchTunes

argues

that

"play

sequence

listing

the

definition segment" should be construed to be "a list including
the definition segment itself
the

definition

argument

definition

segments,

multimedia

segment

of

(i.e.

the

arranged
structures

segment association and

tokenized
in

the

argument)
order

corresponding

in
to

which
the

definition segments in the list are to be executed."
27

and

other
the

various
Arachnid

contends

that

defining a

this

term

should

be

defined

list of definition segments;

fixed or dynamically determined.

as

"instructions

the list being either

H

The relevant claim language states:
the memory
so storing a play sequence listing the
definition segment and thereby determining when the
multimedia segment structure is executed.
('780 Patent claim 1.)

According to the

'780 patent's

"Detailed Description

of the Invention":
The jukebox 13 generally executes multimedia segment
structures according to a play sequence. The play
sequence,
which
may
be
fixed
or
dynamically
determined,
defines
which
multimedia
segment
structures to execute and when to execute them. For
example,
the
segment
structures may be executed
according to a play sequence which proceeds through a
list of segment structures sequentially, and loops
back to the first segment structure when the end of
the list is reached.
('780 Patent 4:24-33.)
the

'780

Patent,

Thus,

lists

the play sequence,

the

def ini t ion

as defined

segments,

thereby

determining when the multimedia segment structure is executed,
and it may be fixed or dynamically defined.

28

Arachnid added the "listing the definition segment and
thereby determining"

requirements to the claimed play sequence

in response to a prior art
Decl. Ex. 6 at 7.)

ection from the PTO.

See Reavill

The original claims recited "a play sequence

determining when the multimedia segment structure is executed."
(Reavill Decl. Ex. 4 at 27, Ex.

6 at 7.)

The PTO cited Liu as
(Reavill Decl. Ex.

specifically disclosing that play sequence.
5 at 11.)
play

In response, Arachnid amended the claims to recite "a

sequence

listing

determining when

the

definition

segment

and

thereby

multimedia segment structure is executed."

(Reavill Decl. Ex. 6 at 7.)

Thus, the amended claims explicitly

require that the play sequence list the definition segments and
make

timing determination according to that list.

Arachnid

surrendered coverage of any other type of play sequence.
e.g., Rheox,
Cir.

Inc. v. Entact,

2002).

It

is

not

Inc.,

276 F.3d 1319, 1325-27

clear

"instructions defining" a list of
sequence

is

claim 1.)

the

list

Arachnid's

timing aspect of the

of definition

what

(Fed.

means

by

finition segments. The play
segments.

construction also
aim language.

Arachnid

See

does

(' 780
not

patent

address

at
the

('780 Patent claim 1,4:24­

33, 5:52-57.}

In view of the claim language and prosecution history,
"play sequence listing the definition segment"
29

is construed as

"a fixed or dynamically determined list of definition segments
multimedia segment structures

arranged in the order in which
corresponding

to

the

various

definition

segments

are

agreement

as

to

be

executed."

I.

Segment Association

The

parties

construction of

are

in

substantial

"segment association."

TouchTunes

to

argues

the
that

the term should be defined as "a reference to a control segment
to

be

executed"

while

Arachnid

proposes

"instructions

for

referencing or executing another segment structure."

The

relevant

portion

of

this

claim

states:

"a

definition segment comprising a segment association invoking the
control

segment."

( \ 780

Patent

claim

1.)

The

Patent

additionally states:

Thus,
FIG. 2, the [definition]
segment invokes
(with
TEMPLATE command)
the
[control]
segment
"template.mac". The TEMPLATE command is one example of
an association between a definition segment and a
[control] segment. Other segment associations may be
used,
including
pointers,
program
branches,
and
program jumps, for example.

(Id.

assoc

at

5:64-6:3.)

Thus,

the

patent

ion invokes the control segment.
30

states

that

the

segment

In
association"
to

execut

J.

light

is construed as

"segment

evidence,

intrins

the

of

"a reference to a control segment

"

Memory

TouchTunes argues that "memory" should be construed as
"a

computer

device

st

that

stores

both

the

segment structure and the play sequence list
segment,"

while

Arachnid

proposes

"data

multimedia

the definition

storage

used

by

the

electronic device."

The

ies
both

agree
the

that

construed,

stores

mul timedia

sequence.

The parties dispute,

the

"memory, "

structure

however,

and

whether this

however
the

play

"memory"

must be a single device or refers to the overall data storage
capacity of the system.

The '780 Patent states:
data storage unit 93 may be implemented as a
magnetic memory
(for example,
a hard disk drive)
and/or an optical memory (for example, a Compact Disk
drive) .
. The storage unit 93 and associated song
library 91 may be an optical memory or any other
available large volume nonvolatile computer memory
31

that provides both read and write access.
Control
segments
or
definition
segments
may
be
provided, for example, as files stored on a hard disk
or the li , as data stored in ROMs or loaded in RAM,
or as files or data stored on a floppy disk.

('780 Patent 3:29-38,

4:43 45i

storage unit

93").)

Thus,

the

multimedia

'780

Patent,

see also Figure 1

(showing "data

as defined and as described
segment

structure

and

the

the

play

sequence are stored in the data storage unit which, as express
stated
storage

in

the

'780

capacity

TouchTunes'

Patent,

of

the

RAM,

construction

preferred embodiments.

may

comprise,

the

would

ROM,

for
or

the

the

.,

hard

drive.

excluded

improperly

See Vitrionics

instance,

these

90 F.3d at 1583;

Verizon Servs.
., 503 F.3d at 1305; Primos Inc., 451 F.3d at
--------------------~848.

That
further

"memory"

supported

Electrical

and

by

refers

to

extrinsic

Electronics

overall

evidence.

Engineers

data

defines

is

Institute

The

storage

of

"memory"

to

be

\\[a]ll of the addressable storage in a processing unit and other
internal storage that is used to execute instructions." THE IEEE
STANDARD DICTIONARY OF ELECTRICAL AND ELECTRONIC TERMS 645
ed.

1996)

(Dkt.

No.

192 6)

-=cC.::.::h-=ce-=r-=.:n::":'._=-=-::JL..~1

441 F.3d 991,

to

dictionaries

technical

i

see
996

also Atofina__v.
...c__

(Fed.

~~.~~~

Cir. 2006)

assistance

32

in

~

(6th

~~~~==~~

("one may look
determining

[a]

term's

meaning

to

a

person

of

ordinary

skill

in

the

art"

(citation omitted)).

In light of the evidence,

Literal Argument

The
meaning
is

of

is

storage used by the electronic device."

be construed to be

K.

the claim term "memory"

ies

"literal
ined

do

not

disagree

argument."

by

itself"

conceptually as

TouchTunes
or,

proposes

alternat

ly,

argument that explicitly recites its own value
'print

"FAIL'"

Arachnid

argues

that

specif

term

should

"a value

"a

computer

, FAIL' ) .

(i.e. non-variable) value for a command."

language.

its

the

example, the

argument

"Lit

recites

to

argument"

is

not

own
be

value:

construed

defined

in

as

the

The '780 Patent states:

Note that the commands accept one or more arguments,
either in literal form (for example,
specifi
ly
naming
text,
XY
locations,
or
filenames
as
'arachnid.bmp'), or
a tokenized form in which
identifiers
(
example,
ATESTI)
are
used
as
placeholders for an actual argument.

33

/I

"a

claim

('780

Patent

Thus/

5:31-36.)

a

literal

argument

provides

a

specified/ or "literal/" value for something.

As the parties are in conceptual agreement as to the
meaning of literal argument and Arachnid's construction is most
straightforward,

the

construed to

"a

command.

be

claim
spe

term

"literal

i.e.

f ied

argument"

non-variable)

value

is
for

be
a

II

L.

Retire

The parties are in agreement that "retire" in claim 4
is

a

typo,

which

should

corrected accordingly.
CTS

Cement Mfg.

Lemelson v.

Corp./

read

See

General Mills,

The

II

Patent

. , UI timax Cement

e.

587

"retrieve.

F.3d 1339,
Inc./

1353

v .

(Fed.

968 F.2d 1202,

is

C

2009) i

1203 n.3

(Fed.

Cir. 1992).

IV.

TOUCHTUNES' MOTION TO AMEND
A.

Legal Standard

Rule

15

of

the

Federal

Rules

of

Civil

Procedure

provides that "[t]he court should freely give leave when justice
so requires.

1f

Fed.R.Civ.P. 15 (a) (2).
34

In the absence of any apparent or declared reason
such as undue delay, bad
ith or dilatory motive on
the part of the movant,
repeated failure to cure
ficiencies by amendments previous
allowed, undue
prejudice to the opposing party by virtue of
lowance
of the amendment, futility of amendment, etc.
the
leave sought should, as the rules require, be 'freely
given. '

Foman v. Davis,
Inc.

v.

371 U.S. 178,

Herrick

Co.,

Inc.,

182

(1962);

360

("[U]nder Fed.R.Civ.P. 15(a),

F.3d

SCS~Commc'ns,

see also

329,345

(2d

Cir.

2004)

leave to amend a pleading may only

given when factors such as undue delay or undue prejudice to
the

opposing

However,

are

"'mere delay'

al

a

Indus.,

party

Rule

is not,

15 (al

204 F.3d 326,

absent.

also Ruotolo v. Ci

of itself,

motion.

339

Foods
F.3d

to

withstand

L.C.
1339,

of

2000)

a

futile

dispositive

in

v.

to justify

Columbia

being

Cir.

(2d Cir. 2008).

when they would not

pretrial

denied

2006)

leave

motion.

("When
to

Pictures

(citation omitted); see

es Del Centro S.A.
(Fed.

original)).

suffic

N.Y., 514 F.3d 184,191

v.
1354-55

possibility

Parker

/I

(2d Cir.

Proposed pleadings are
able

(emphasis

/I

a

amend

Kemin

de C.V.,

party

on

See

the

be

464

faces

the

ground

of

futility,

that party must demonstrate that its pleading states a

claim

which

on

relief

could

be

granted,

and

it

must

prof

sufficient facts supporting the amended pleading that the claim

35

could

survive
se

v.

a

disposi ti ve

pretrial
244

.,

Rust-Oleum

motion. ")
104,

F.3d

see

i

also

(2d

110-11

r .

2001) .

B.

TouchTunes' Motion to Amend Is Granted

In the proposed Amended Complaint,
a

aim

for

computer

("the

202-1.).)

"infectious
an

'834

Patents.

the

TouchTunes

of

'398

Patent").

the

regarding

Arachnid's

and U. S.

Patent

Patent

(Proposed Am.

also

unenforceability"

extension

("IEQ")

conduct

jukebox patents,

6,970,834
No.

inequitable

TouchTunes alleges

seeks

to

regarding

alleged

IEQ

add

of

based

CompI.
a

new

the

on

7 61

(Dkt.

claim

for

Patent,

'780

the

No.

as

'398

and

'834

See id. 61-64.)

"To prevail on the defense of inequitable conduct,
accused
or

ringer must

omitted

mat

deceive the PTO.
649 F.3d 1276,
Inc.

v.

2007)

that

information
II

Therasense,

1287

the
with

Inc.

(Fed. Cir. 2011)

BrokerTec USA,

L.L.C.,

("[I]nequitable

misrepresentation
material

prove

of

information,

a

480

v.

applicant
the

(en banc)

material
or

i

fact,

1135

failure
of

&

to

Co.,

see also eSpeed,

includes

submission
36

intent

Dickinson

F.3d 1129,

conduct

misrepresented

specif

Becton,

the

(Fed.

Cir.

affirmative
to

false

disclose
material

coupled

information,

. v.

with

an

intent

Par Pharm.

Inc.,

~==~~~~~~~~~~~~--~--~------

Cir.

"[T]he

2005)).

'atomic

patent

bomb'

regarding

any

unenforceable."

single

for

[ I]

F.3d

can

family.

its

recent

Federal

Circuit

intent

and materi

doct

related

en

banc

"tighten [ed]
ity

patents

the

conduct

entire

patent

1288

the

(citations

from

at

in

is

inequitable

Id. at 1288-89.

In

to

(Fed.

nequi t ab 1 e

unenforceability resulting

conduct

1373

conduct

the

renders

649

.....

reach

inequitable

claim

(quoting

deceive."

417 F.3d 1369,

law

Therasense,
-_

Further,

omitted)

remedy

to

decision

the

standards

[in IEQ cases]

in

same

technology

Therasense,

for

finding

in order to

the
both

redirect

a

that has been overused to the detriment of the public."

Therasense,

649

F.3d at

1290.

As

to material ity,

Therasense

held that information that has been withheld from the PTO during
prosecution is material

if

satisf ies

"but - for material i ty,

that is
When an applicant fails to
sclose prior art to the
PTO, that prior art is but material if the PTO
would not have
lowed a claim had it been aware of
the undisclosed prior art. Hence, in assessing the
materiality of a withheld reference, the court must
determine whether the PTO would have allowed the claim
if it had been aware of the undiscl
reference.

37

II

Id.

generally must be

"Although but for materiali

at 1291.

proved to satisfy the materiality prong of inequitable conduct,
this

court

egregious

recognizes

misconduct,"

false affidavit.

an

exception

such as

Id.

conduct

specificity under Rule 9(b).
Inc.,

cases

filing

of

of

affirmative

an unmistakably

at 1292.

Inequitable

the

in

575 F.3d 1312, 1326-28

must

claims

be

pled

with

Exergen Corp. v. Wal-Mart Stores,
(Fed. Cir.

2009)

i

Nycomed,

2010 WL

1257803 at *13-*14.
[T] 0 plead the "circumstances" of inequitable conduct
with the requisite "particularity" under Rule 9 (b)
the pleading must identify the specific who, what,
when, where, and how of
material misrepresentation
or omission committed before the PTO.
Moreover,
though "knowledge" and "intent
may be averred
generally, a pleading of inequitable conduct under
Rule 9(b)
must include sufficient allegations
underlying facts.
[T]he pleading [must] identi
which claims, and which limitations in those claims,
the withheld references are relevant to, and where in
those references the material information is found-­
i. e.
the
"what"
and
"where"
of
the
mater I
omissions.
. [The pleading must]
identify the
particular claim limitations, or combination
claim
limitations,
that are supposedly absent from the
information of record. Such allegations are necessary
to explain both "why" the withheld information is
material and not cumulative, and "how" an examiner
would have used this information in assessing the
patentability of the claims.
I

ff

I

Exergen, 575 F.3d at 1328-30 (citations omitted) .

38

However,

not

do

Rule

9(b)

def

tively

"[t]he

prove

require
the

defense.

U

[the

that

merits

determinative here is that
the basis for

pleading

heightened

accused
claim.

its

of

requirements

[the patentee is]

[the accused infringer's]

of

infringer]
What

is

given fair notice
inequitable conduct

WesternGeco v. Ion Geophysical Corp., 2009 WL 3497123,

at *7 (S.D. Tex. Oct. 28, 2009).

In

its

new claims,

intentionally made
scope

and

se

content

of

TouchTunes

statements

karaoke

to

prior

leges
the

art

relevance of prior art karaoke references,
contradicted

Arachnid's

PTO
and

that Arachnid
regarding

the

concealed

the

including

representations.

that

Specifi

ly,

TouchTunes alleges that Arachnid misinformed the PTO that prior
art karaoke machines were not capable of co
not

allow

assistance.

a

customer

As

leged,

Arachnid submitted
Arachnid.

to

select

songs

operation and did
without

additional

during the reexamination proceedings,

declaration of Patrick Rice, cO-President

That declaration represented that in 1992 karaoke

machines in public use were much different than juke boxes, were
not coin operated

l

were not operated by patrons but instead by a

dedicated operator, and did not store or play the kind of studio
quality versions of songs played in jukeboxes.

The PTO Examiner

rejected claims of the '398 and '834 Patents based on prior art
39

karaoke
the

technology,

PTO

and Arachnid appealed
TouchTunes

Board.

asserts

those

that

ions

rej

before

the

to

Board

Arachnid again argued that karaoke prior art was distinct from
juke

boxes

for

these

ed,

As

reasons.

TouchTunes

brought

information contradicting Arachnid's patentability arguments to
Arachnid's
Arachnid

attention
did

not

during

direct

the

that

pendency

of

information

the

to

the

Examiner's

operation

or

Board

but

which did not

TouchTunes alleges that the Board reversed
ections

based

on Arachnid's

and specifically the Rice declaration.
could not

but

the

instead to the PTO's Central Reexamination Unit,
have jurisdiction.

appeal,

say that

karaoke

allowed

a

additional assistance.

The Board concluded that

machines

customer

to

Following

misinformation,

were

capable

select

s reversal,

ex parte reexamination certificate for both the

of

songs

coin

without

the PTO issued
\ 398 and

\ 834

Patents.

Arachnid
should

be

argues

dismissed

that

as

futile

following the Board's reversal,
claims after considering the
the basis of TouchTunes'
indeed provided

the

TouchTunes'
because

on

to

karaoke

references

lowed the

that

now form

Arachnid argues that it

Examiner with

40

amend

reexamination,

the Patent Examiner

IEQ claims.

Patent

motion

some

of

TouchTunes'

chosen quotations from those references,
them.

(Dkt. Nos. 205-3, 205-4, 205-5, 205 6.)

Examiners
references.
citations
init

if to attempt to refute

have

See MPEP
submitted

a

duty

609.05 (b)

§

to

consider

all

prior

art

("Examiners must consider all

in conformance

with

the

rules,

and

their

s when placed adjacent to the considered citations on the

list or in the boxes provided on a form PTOjSBj08A and 08B .
provides a c

which citations have been considered

record

by the Office.")

.,

(Dkt.

No.

908 F.2d 931,

Medical Consultants, Ltd. v.
n.8

(Fed.

r.

205-1)

1988)

938

i

Northern Telecom,
(Fed.

Holliste~,

Cir.

v.

Kingsdown

Inc., 863 F.2d 867, 874,

("Blind reliance on

[counsel's]

candor would render examination unnecessary,
statute or Manual

1990) i

Inc.

presumed

and nothing

Patent Examining Procedure would

the
justify

reliance on counsel! s candor as a substitute for an examiner! s
duty to examine the claims.
more limited in the specif

However!

tf) •

this duty is somewhat

context of ex parte reexamination:

Where patents! publications! and other such items of
information are submitted by a party (patent owner or
requester) in compliance with the requirements of the
rules, the requisite degree of consideration to be
given to such information will be normal
limited by
the degree to which the party filing the information
citation has explained
content and relevance of
the information. The init
s of the examiner placed
acent to the citations on the form PTOjSBj08A and
41

08B or its equivalent I without an indication to the
contrary in the record, do not signify that the
information has been considered by the examiner any
further than to the extent noted above.

MPEP

2256.

§

references,

the

Here,

except

Liu,

Examiner

initialed

the

karaoke

to which TouchTunes now points.

(Dkt.

Nos. 205-7 & 205-8.)

Arachnid

argues

that

for

s

reason,

TouchTunes

cannot prove the requisite but for materiality under Therasense.
However, Therasense does not require but-for materiality in all
cases

and

recognized

egregious

misconduct,

fidavit.

false

an

exception

for

specifically

cases

including

649 F.3d at 1292.

of

the

firmative
filing

of

On the present motion, all

factual allegations in the complaint are accepted as true,
all

inferences

Polar

are drawn in

Molecular

TouchTunes has
the

Rice

and

including

and

favor
F.3d

the

1170,

pleader.

1174

(2d

were

that

not

has

specified

karaoke

operated

by

the

machines
patrons

and

Mills v.
Cir.

ed that Arachnid submitted a false

declaration,

statements,
operated

12

• t

a

1993).
fidavit,

allegedly

false

were

coin

but

not

instead

a

dedicated operator, which the PTO Board in turn expressly relied
upon in reversing the Examiner.
"what,

If

"where,

ff

"why,

If

This is suff

and "how

ff

at 1328 30.
42

ient to plead the

required by Exergen,

575 F. 3d

At this stage,
whether

[TouchTunes]

entitled

to

offer

'" [t] he issue before the Court

will ultimately prevail,
evidence'

to

inequitable conduct." Nycomed,

support

is not

but whether it

its

allegations

lS

of

(citation

As TouchTunes has alleged sufficient facts

omitted) .

2010 WL 1257803 at *18

to nudge

its claims "across the line from conceivable to plausible," Bell
Atlantic Corp. v. Twombly,
absence of any delay,
factor,

as here,

550 U.S.

bad faith,

544,

570

(2007),

and in the

undue prej udice or other such

"the leave sought should, as the rules require,

be 'freely given.'"

Foman v. Davis, 371 U.S. at 182.

TouchTunes'

motion

for

leave

to

amend

is

therefore

granted.

C.

Arachnid Is Not Entitled to Fees or Costs

Arachnid has
as to TouchTunes'
U.S.C.

§

additionally sought

motion to amend.

the

award

Award of sanction under 28

1927 is appropriate when there is "clear evidence that

the challenged actions are entirely without color,
for

sanctions

reasons

of

harassment

or

delay

or

for

and are taken

other

improper

purposes" and upon "a high degree of specificity in the factual
findings"

of the district court.
43

Oliveri v.

Thompson,

803 F.2d

1265,

1272-73

(2d

Cir.

1986).

No

such

evidence

has

been

presented, and Arachnid's request for fees and costs is denied.

V.

CONCLUSION

For the

reasons

terms are given the def
TouchTunes

f

set

forth above,

tions

set

the

forth in

disputed claim
s

motion to amend is granted.

It is so ordered.

J'

New York, NY
March /

2012

U.S.D.J.

44

opinion and