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`UNITED STATES INTERNATIONAL TRADE COMMISSION
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`Washington, D.C.
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`In the Matter of
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`CERTAIN SMART THERMOSTATS,
`LOAD CONTROL SWITCHES, AND
`COMPONENTS THEREOF
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`Inv. No. 337-TA-1277
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`INITIAL DETERMINATION ON VIOLATION OF SECTION 337 AND
`RECOMMENDED DETERMINATION ON REMEDY AND BOND
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`Chief Administrative Law Judge Clark S. Cheney
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`(November 16, 2022)
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`Pursuant to the Notice of Investigation, 86 Fed. Reg. 49345 (Sept. 2, 2021), and 19 C.F.R.
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`§§ 210.10(b), 210.42(a)(1)(i), this is the final initial determination in the matter of Certain Smart
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`Thermostats, Load Control Switches, and Components Thereof, Investigation No. 337-TA-1277.
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`For the reasons stated herein, I have determined that no violation of section 337 of the
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`Tariff Act of 1930, as amended, has been demonstrated in the record of this investigation.
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`TABLE OF CONTENTS
`TABLE OF CONTENTS
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`I.
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`II.
`II.
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`INTRODUCTION ……………………………………………………….….
`INTRODUCTION ........cccccscccensecscccccecescecceccnsenseccensesseceasecssceeees
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` 1
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`IMPORTATION, JURISDICTION, AND STANDING …………….……
`IMPORTATION, JURISDICTION, AND STANDING .........c.cceceeeceee
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` 16
`16
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`III. LEVEL OF ORDINARY SKILL IN THE ART …..………………….…..
`LEVEL OF ORDINARYSKILL IN THE ART .............cccceececcecceeeene
`III.
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` 27
`27
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`IV. CLAIM CONSTRUCTION – ALL ASSERTED PATENTS ………….…
`CLAIM CONSTRUCTION — ALL ASSERTED PATENTS ...........0000.
`IV.
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` 27
`27
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`V.
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`INFRINGEMENT – ALL ASSERTED PATENTS …………………..…..
`INFRINGEMENT — ALL ASSERTED PATENTS ..........ccccecscceeseesere
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` 40
`40
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`VI. DOMESTIC INDUSTRY – TECHNICAL PRONG ………….………….. 120
`DOMESTIC INDUSTRY — TECHNICAL PRONG............ccccceseeseecene
`120
`VI.
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`VII. DOMESTIC INDUSTRY – ECONOMIC PRONG ………….…………… 165
`DOMESTIC INDUSTRY — ECONOMIC PRONG.........cccceeceeceececceee
`165
`VIL
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`VIII. VALIDITY ………..…………………………………………………….…….
`VALIDITY .......ccccccccecccceccesccsecceccenseceacecsscescecceccnseesecsecsesseseccees
`VIn.
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` 177
`177
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`IX. OTHER DEFENSES ………..………………………………….……….……
`OTHER DEFENSES ...........cccccccscccccecesccncecceccnsecseccenseeeececcnecesenes
`IX.
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`212
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`X.
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`CONCLUSIONS OF LAW …………………………………………….……
`CONCLUSIONSOF LAW.
`.........c.ccccesceseccencecscceccecsecescecceccnesecenes
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` 224
`224
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`XI. RECOMMENDED DETERMINATION ON REMEDY AND BONDING 225
`RECOMMENDED DETERMINATION ON REMEDY AND BONDING
`225
`XI.
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`XII.
`XII.
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`INITIAL DETERMINATION ON VIOLATION ………………………… 232
`INITIAL DETERMINATION ON VIOLATION ..........sccceeeenseceeceeees
`232
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`XIII. ORDER ………………………………………………………………...……..
`ORDER ........ cc cccceesecceneeneecenceceecenceececcnsensecseccesessaceesecseceeessceeces
`XIII.
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`232
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`Table of Abbreviations
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`CDX
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`CIB
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`CPX
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`CRB
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`CX
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`Dep.
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`JX
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`RDX
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`RIB
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`RPX
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`RWS
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`RX
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`Tr.
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`WS
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`Complainant’s demonstrative exhibit
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`Complainant’s initial post-hearing brief
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`Complainant’s physical exhibit
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`Complainant’s responsive post-hearing brief
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`Complainant’s exhibit
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`Deposition
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`Joint Exhibit
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`Respondents’ demonstrative exhibit
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`Respondents’ initial post-hearing brief
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`Respondents’ physical exhibit
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`Rebuttal Witness Statement
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`Respondents’ exhibit
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`Transcript
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`Witness Statement
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`I.
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`Introduction
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`A.
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`Procedural History
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`On July 28, 2021, complainant Causam Enterprises, Inc. (“Causam” or “Complainant”),
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`filed a complaint alleging violations of section 337 based on the importation into the United States,
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`the sale for importation, and the sale within the United States after importation of certain smart
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`thermostats, load control switches, and components thereof. 86 Fed. Reg. 41991 (Aug. 4, 2021).
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`On September 2, 2021, the Commission instituted Investigation No. 337-TA-1277 to
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`determine:
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`[W]hether there is a violation of subsection (a)(1)(B) of section 337 in the importation
`into the United States, the sale for importation, or the sale within the United States after
`importation of certain products identified in paragraph (2) by reason of infringement of
`one or more of claims 1–9, 16, 19–21, 23–28, and 30 of the ‘5,552 patent [U.S. Patent
`No. 8,805,552], claims 1–8, 10, 13–17, 19– 23, and 25–29 of the ‘8,522 patent [U.S.
`Patent No. 9,678,522], claims 1–11, 13–16, and 18–19 of the ‘268 patent [U.S. Patent
`No. 10,394,268], and claims 1–2, 8–9, 11, 13–14, and 17 of the ‘592 patent [U.S. Patent
`No. 10,396,592]; and whether an industry in the United States exists as required by
`subsection (a)(2) of section 337.
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`86 Fed. Reg. 49345 (Sept. 2, 2021) (hereinafter, “Notice of Investigation”).
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`The plain language description of the accused products in the complaint defines the scope
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`of the investigation. 19 C.F.R. § 210.10(b)(1). The products are described as “smart thermostats
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`and load control switches with Demand Response functionality and components thereof.” Notice
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`of Investigation.
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`The Notice of Investigation named the following entities as respondents:
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`1. Alarm.com Holdings, Inc., of Tysons, Virginia;
`2. Alarm.com Inc. of Tysons, Virginia;
`3. Ecobee, Inc., of Toronto, Ontario, Canada;
`4. EnergyHub, Inc., of Brooklyn, New York;
`5. Itron, Inc., of Liberty Lake, Washington;
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`6. Itron Distributed Energy Management, Inc., of Liberty Lake, Washington;
`7. Resideo Smart Homes Technology (Tianjin) of Tianjin, China;
`8. Resideo Technologies, Inc., of Austin, Texas; and
`9. Xylem Inc. of Rye Brook, New York.
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`Id.
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`The Office of Unfair Import Investigations is not a party to this investigation. Id.
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`On October 14, 2021, the target date for this investigation was set at approximately 18.5
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`months, which makes this final initial determination due no later than November 16, 2022. Order
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`No. 3 (Initial Determination Setting Target Date) (Oct. 14, 2021), aff’d, Commission
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`Determination Not to Review an Initial Determination Setting the Target Date for Completion of
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`the Investigation at Approximately 18.5 Months (Nov. 3, 2021).
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`The Commission affirmed the following initial determinations:
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`• Order No. 5 (Initial Determination Granting Motion to Intervene) (Oct. 22, 2021), aff’d,
`Commission Determination Not to Review an Initial Determination Granting a Motion
`by Alston and Bird LLP to Intervene in this Investigation for a Limited Purpose (Nov.
`5, 2021);
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`• Order No. 7 (Initial Determination Granting Motion to Terminate the Investigation As
`to Xylem Inc. Based on Settlement Agreement) (Dec. 10, 2021), aff’d, Commission
`Determination Not to Review an Initial Determination Granting a Joint Motion to
`Terminate the Investigation as to Respondent Xylem Inc. (Jan. 10, 2022); and
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`• Order No. 12 (Initial Determination Granting Motion to Amend the Complaint and
`Notice of Investigation to Add Proposed Respondent Ademco Inc. and to Partially
`Withdraw the Complaint) (Apr. 21, 2022),1 aff’d, Commission Determination Not to
`Review an Initial Determination Granting an Unopposed Motion to Amend the
`Complaint and Notice of Investigation and to Terminate the Investigation as to a
`Respondent and Certain Patent Claims (May 17, 2022).
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`1 As a result of Order No. 12, (1) respondent Itron Distributed Energy Management, Inc., was
`terminated; (2) respondent Resideo Technologies, Inc., was terminated, and (3) Ademco Inc. was
`added as a new respondent. Hereinafter, “Respondents” refers to Alarm.com Holdings, Inc.;
`Alarm.com Inc.; Ecobee, Inc.; EnergyHub, Inc.; Itron, Inc.; Resideo Smart Homes Technology
`(Tianjin); and Ademco Inc.
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`On June 17, 2022, the investigation was reassigned to me. See Reassignment to CALJ
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`Cheney; Setting Case Management Conference (June 17, 2022) (EDIS Doc. ID No. 773378).
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`A prehearing conference was held on June 28, 2022, with the evidentiary hearing
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`commencing immediately thereafter. The hearing concluded on July 1, 2022. See Order No. 19
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`(June 24, 2022); P.H. Tr. 1-29; Tr. 1-1006. The parties were requested to file initial post-hearing
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`briefs not to exceed 300 pages in length, and to file responsive briefs not to exceed 100 pages in
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`length. See Tr. 957. On July 21, 2022, the parties filed a joint outline of the issues to be decided
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`in the final initial determination. See Joint Outline of Issues to be Decided in the Initial
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`Determination (“Initial Joint Outline”) (EDIS Doc. ID No. 775939). On August 3, 2022, the
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`parties filed a joint outline for the responsive briefs. See Final Joint Outline of Issues to Be
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`Decided in the Initial Determination (“Final Joint Outline”) (EDIS Doc. ID No. 777024).
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`B.
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`The Parties
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`1. Complainant Causam
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`Complainant Causam Enterprises, Inc. (“Causam” or “Complainant”) is a Delaware
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`corporation having its principal place of business at 8480 Honeycutt Road, Suite 200, Raleigh, NC
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`27615. Complaint, ¶ 9.2
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`2. Respondents
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`a.
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`Alarm.com Respondents
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`Alarm.com Holdings, Inc., and wholly owned subsidiary Alarm.com, Inc., are Delaware
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`corporations with a principal place of business at 8281 Greensboro Drive, Suite 100, Tysons,
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`Virginia. EnergyHub, Inc., is in turn a wholly owned subsidiary of Alarm.com, Inc., and is a
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`2 Additional details concerning the history of corporate entities predating Causam are provided in
`the Standing section below.
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`Delaware corporation with its principal place of business at 41 Flatbush Ave., Suite 400A,
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`Brooklyn, New York.3 See Alarm.com Respondents’ Response to the Complaint and Response to
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`the Notice of Investigation, ¶¶ 12, 14, 16, EDIS Doc. ID No. 753373 (Oct. 4, 2021).
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`b.
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`Respondent ecobee
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`ecobee, Inc. (“ecobee”), is a corporation existing under the federal laws of Canada with its
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`principal place of business at 25 Dockside Drive, Suite 600, Toronto, Ontario, M5A OB5, Canada.
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`See Response of ecobee, Inc. to Complaint of Causam Enterprises, Inc. under Section 337 of the
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`Tariff Act of 1930 and to the Notice of Investigation, ¶ 16, EDIS Doc. ID No. 753367 (Oct. 4,
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`2021).
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`c.
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`Respondent Itron
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`Itron, Inc. (“Itron”) is a Delaware corporation with principal place of business at 2111 N.
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`Molter Road, Liberty Lake, Washington, 99019. See The Itron Respondents’ Response to the
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`Complaint and Notice of Investigation, ¶ 18, EDIS Doc. ID No. 753370 (Oct. 4, 2021).
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`d.
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`Resideo Respondents
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`Ademco Inc. is a Delaware corporation with its principal place of business at 263 Old
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`Country Road, Melville, NY, 11747-2712. See Proposed Amended Complaint (Ex. B to Motion
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`Docket No. 1277-20), ¶ 22. Resideo Smart Home Technology (Tianjin) is a corporation existing
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`under the laws of the People’s Republic of China with its principal place of business at Building
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`30, No. 156 Nanhai Road, Tianjin Province, 300457, China. See The Resideo Respondents’
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`Response to the Complaint and Notice of Investigation, ¶ 24, EDIS Doc. ID No. 753364 (Oct. 4,
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`3 Hereinafter, Alarm.com Holdings, Inc.; Alarm.com, Inc.; and EnergyHub, Inc., are referred
`collectively as “Alarm.com Respondents.”
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`2021). Ademco Inc. and Resideo Smart Home Technology (Tianjin) (collectively, “Resideo
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`Respondents”) are corporate affiliates under common ownership. See CIB at 2; Order No. 12 at
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`2.
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`C.
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`The Asserted Patents
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`As noted above, Causam asserts four patents in this investigation: the’552 patent, the’522
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`patent, the’268 patent, and the ’592 patent (the “Asserted Patents”). As discussed in the Overview
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`of the Technology section below, the ’552, ’522, and ‘’268 patents are related.
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`1. U.S. Patent No. 8,805,552
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`The ’552 patent, titled “Method and apparatus for actively managing consumption of
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`electric power over an electric power grid,” issued on August 12, 2014, and names Joseph W.
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`Forbes, Jr., as the inventor. JX-0001 (’552 Patent) at Cover. The ’552 patent issued from
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`Application No. 13/463,761 (’761 Application), filed on May 3, 2012. The ’761 Application is a
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`continuation-in-part of application No. 13/172,389, filed on June 29, 2011, now U.S. Patent No.
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`8,315,717. The earliest priority date for each of the asserted claims of the ’552 patent is May 3,
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`2012.
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`Causam asserts claims 19 and 23 of the ’552 patent. See CIB at 5. The asserted claims
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`read as follows:
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`19. A client device for use in a system that manages electric power
`on an electric grid, wherein the power is supplied to a plurality of
`power consuming devices, wherein power flow over the electric grid
`to at least some of the plurality of power consuming devices is enabled
`and disabled by a plurality of controllable devices, wherein at least one
`controllable device operates under the control of the client device, and
`wherein the client device receives power control messages from a
`remote load management server, and wherein a power control message
`received from the load management server is responsive to a power
`reduction request issued by a control center,
`the client device comprising:
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`at least one controllable device interface facilitating
`communication of power control instructions to the at least one
`controllable device,
`the power control instructions causing the at least one controllable
`device to selectively enable and disable a flow of electric
`power to at least one power consuming device of the plurality
`of power consuming devices;
`and a device control manager operably coupled to the at least one
`controllable device interface,
`the device control manager issuing a power control instruction to
`the at least one controllable device through the at least one
`controllable device interface responsive to the received power
`control message,
`the power control instruction causing the at least one controllable
`device to disable a flow of electric power to at least one
`associated power consuming device so as to achieve a
`reduction in consumed power as requested by the control
`center, and based upon the reduction in consumed power,
`generating at the control center a power supply value (PSV)
`corresponding to the reduction in consumed power.
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`23. The client device of claim 19, wherein the received power
`control message indicates at least one of an amount of electric power
`to be reduced and an identification of a controllable device to be
`instructed to disable a flow of electric power to one or more associated
`power consuming devices.
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`JX-0001 (’552 Patent) at claims 19, 23.
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`2. U.S. Patent No. 9,678,522
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`The ’522 patent, titled “Method and apparatus for actively managing consumption of
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`electric power over an electric power grid,” issued on June 13, 2017, and names Joseph W. Forbes,
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`Jr., as the inventor. JX-0002 (’522 Patent) at Cover. The ’522 patent issued from Application
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`No. 14/456,306, filed on August 11, 2014. The ’522 patent is a continuation of the ’552 patent.
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`The earliest priority date for each of the asserted claims of the ’522 patent is May 3, 2012.
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`Causam asserts method claim 1 and apparatus claims 15, 19, and 22 of the ’522 patent.
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`See CIB at 6. The asserted claims read as follows:
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`1. A method for a client device to manage a flow of power within
`an electric power grid to a plurality of power consuming devices, the
`client device being responsive to power control messages issued by a
`load management server and controlling at least one controllable
`device that selectively enables and disables electric power to flow to at
`least one of a plurality of power consuming devices, the method
`comprising the steps of:
`receiving a power control message from the load management
`server, the power control message being responsive to a power
`control request and indicating at least one of an amount of
`electric power to be reduced, disabled, or enabled and an
`identification of at least one controllable device to be instructed
`to enable or disable a flow of electric power to at least one
`associated power consuming device;
`responsive to the power control message, issuing a power
`management command to a controllable device, the power
`management command causing the controllable device to
`disable a flow of electric power to at least one associated
`power consuming device to provide a reduction in consumed
`power; and
`generating a power supply value (PSV) corresponding to the
`reduction in consumed power.
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`15. A client device for use in a system that manages electric power
`on an electric grid, wherein the power is supplied to a plurality of
`power consuming devices, wherein power flow over the electric grid
`to at least some of the plurality of power consuming devices is enabled
`and disabled by a plurality of controllable devices, wherein at least one
`controllable device operates under the control of the client device,
`wherein the client device receives power control messages from a
`remote load management server, and wherein a power control message
`received from the load management server is responsive to a power
`reduction request, the client device comprising:
`at least one controllable device interface facilitating
`communication of power control instructions to the at least one
`controllable device, the power control instructions operable to
`cause the at least one controllable device to selectively enable
`and disable a flow of electric power to at least one power
`consuming device of the plurality of power consuming devices;
`and
`a device control manager operably coupled to the at least one
`controllable device interface, the device control manager
`operable to issue power control instructions to the at least one
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`controllable device through the at least one controllable device
`interface responsive to the received power control message, the
`power control instruction operable to cause the at least one
`controllable device to disable or enable a flow of electric power
`to at least one associated power consuming device, and based
`upon the reduction in consumed power for disabled flow of
`electric power, generating a power supply value (PSV)
`corresponding to the reduction in consumed power.
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`19. The client device of claim 15, wherein the received power
`control message indicates at least one of an amount of electric power
`to be reduced and an identification of a controllable device to be
`instructed to disable a flow of electric power to one or more associated
`power consuming devices.
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`22. The client device of claim 15, further including a
`communications interface comprising an Internet Protocol (IP)-based
`interface.
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`JX-0002 (’522 Patent) at claims 1, 15, 19, 22.
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`3. U.S. Patent No. 10,394,268
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`The ’268 patent, titled “Method and apparatus for actively managing consumption of
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`electric power over an electric power grid,” issued on August 27, 2019, and names Joseph W.
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`Forbes, Jr., as the inventor. JX-0003 (’268 Patent) at Cover. The ’268 patent issued from
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`Application No. 15/618,981, filed on June 9, 2017. Id. The ’268 patent is a continuation of the
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`’522 patent. The earliest priority date for claims 1, 6, 7, 14, and 18 of the ’268 patent is Aug. 28,
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`2007. The earliest priority date for claims 2 and 15 of the ’268 patent is May 3, 2012.
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`Causam asserts method claims 1, 2, 6, and 7 and system claims 14, 15, and 18 of the ’268
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`patent. See CIB at 4-5. The asserted claims read as follows:
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`1. A method for managing an electric power flow within an electric
`power grid, comprising:
`a client device receiving a power control message from a load
`management server, the power control message indicating at
`least one of an amount of electric power to be reduced and an
`identification of at least one controllable device to be instructed
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`to disable the electric power flow to at least one associated
`power consuming device;
`the client device issuing a power management command to the at
`least one controllable device, the power management command
`causing the at least one controllable device to disable the
`electric power flow to the at least one associated power
`consuming device to provide a reduction in consumed power;
`and
`generating measurement and verification data corresponding to the
`reduction in consumed power.
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`2. The method of claim 1, further comprising generating a power
`supply value (PSV) corresponding to the reduction in consumed
`power.
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`6. The method of claim 1, wherein the measurement and
`verification data is associated with individual power consuming
`devices.
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`7. The method of claim 1, further including aggregating the
`measurement and verification data for a multiplicity of power
`consuming devices.
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`14. A system for managing electric power on an electric power
`grid, comprising:
`a client device comprising at least one controllable device interface
`facilitating communication of power control instructions to at
`least one controllable device, the power control instructions
`operable to cause the at least one controllable device to
`selectively enable and disable a flow of electric power to at
`least one power consuming device; and
`a device control manager operably coupled to the at least one
`controllable device interface, the device control manager
`operable to issue power control instructions to the at least one
`controllable device through the at least one controllable device
`interface responsive to the received power control instructions,
`and based upon a reduction in consumed power for disabled
`flow of electric power, generate measurement and verification
`data corresponding to the reduction in consumed power;
`wherein the client device receives a power control message from a
`remote load management server, and wherein the power
`control message received from the remote load management
`server is responsive to a power reduction request.
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`15. The system of claim 14, wherein a power supply value (PSV)
`is generated corresponding to the reduction in consumed power, and
`wherein the PSV indicates a compensation provided for power supply
`associated with the reduction in consumed power.
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`18. The system of claim 14, wherein the power control message
`indicates at least one of an amount of electric power to be reduced and
`an identification of a controllable device to be instructed to disable the
`flow of electric power to the at least one power consuming device.
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`JX-0003 (’268 Patent) at claims 1, 2, 6-7, 14-15, 18.
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`4. U.S. Patent No. 10,396,592
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`The ’592 patent, titled “System and method for estimating and providing dispatchable
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`operating reserve energy capacity through use of active load management,” issued on August 27,
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`2019, and names Joseph W. Forbes, Jr., as the inventor. JX-0004 (’592 Patent) at Cover. The
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`’592 patent issued from Application No. 15/594,219, filed on May 12, 2017. The ’592 patent is a
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`continuation of application No. 14/517,399, filed on October 17, 2014, now United States Patent
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`No. 9,651,973, which is a division of application No. 13/466,725, filed on May 8, 2012, now
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`United States Patent No. 8,890,505. The earliest priority date for the asserted claim of the ’592
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`patent is May 8, 2012.
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`Causam asserts dependent system claim 13 (which depends from claim 1) of the ’592
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`patent. See CIB at 6. Non-asserted claim 1 and asserted claim 13 read as follows:
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`1. A system for managing power on an electric power grid,
`comprising:
`at least one power consuming device, at least one controllable
`device, and at least one client device constructed and
`configured in network communication;
`wherein the at least one controllable device is operably coupled to
`the at least one power consuming device;
`wherein the at least one controllable device is operable to control a
`power flow from the electric power grid to the at least one
`power consuming device responsive to power control
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`instructions from the at least one client device;
`wherein the at least one power consuming device has an actual
`value of power reduced based on revenue grade metrology, and
`confirmed by measurement and verification; and
`wherein the actual value of power reduced is a curtailment value as
`supply equivalence and provides operating reserve for the
`electric power grid.
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`13. The system of claim 1, wherein the actual value of power to be
`reduced is a power supply value (PSV); wherein the PSV is generated
`at a control center, a meter, a submeter, a building control system, or
`any device or controller that measures power within the standard as
`supplied by regulatory bodies that govern regulation of the electric
`power grid.
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`JX-0004 (’592 Patent) at claims 1, 13.
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`D.
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`Overview of the Technology
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`The Field of the Invention section of each of the related ’552, ’522, and ’268 patents states,
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`“The present invention relates generally to the field of electrical power load control systems and
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`more particularly to a method and system for actively controlling power load management for
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`individual customers and optionally tracking power savings for both the individual customer as
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`well as the overall electric utility.” JX-0001 (’552 Patent) at 1:20-25; JX-0002 (’522 Patent) at
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`1:24-29; JX-0003 (’268 Patent) at 1:27-32.
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`Prior art shortcomings with respect to power load management are described by
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`the ’552, ’522, and ’268 patents:
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`The increased awareness of the impact of carbon emissions from the use of
`fossil fueled electric generation combined with the increased cost of producing peak
`power during high load conditions has increased the need for alternative solutions
`utilizing load control as a mechanism to defer, or in some cases eliminate, the need
`for the deployment of additional generation capacity by electric utilities. Existing
`electric utilities are pressed for methods to defer or eliminate the need for
`construction of fossil-based electricity generation. Today, a patchwork of systems
`exist to implement demand response load management programs, whereby various
`radio subsystems in various frequency bands utilize “one-way” transmit only
`methods of communication. Under these programs, RF controlled relay switches
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`are typically attached to a customer’s air conditioner, water heater, or pool pump.
`A blanket command is sent out to a specific geographic area whereby all receiving
`units within the range of the transmitting station (e.g., typically a paging network)
`are turned off during peak hours at the election of the power utility. After a period
`of time when the peak load has passed, a second blanket command is sent to turn
`on those devices that have been turned off.
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`….
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`While one-way devices are generally industry standard and relatively
`inexpensive to implement, the lack of a return path from the receiver, combined
`with the lack of information on the actual devices connected to the receiver, make
`the system highly inefficient for measuring the actual load shed to the serving
`utility. While the differential current draw is measurable on the serving electric
`utility's transmission lines, the actual load shed is approximate and the location of
`the load deferral is approximated at the control center of the serving utility.
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`….
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`Attempts have been made to bridge the gap between one-way, un-verified
`power load control management systems and positive control verified power load
`control management systems. However, until recently, technologies such as smart
`breakers and command relay devices were not considered for use in residential and
`commercial environments primarily due to high cost entry points, lack of customer
`demand, and the cost of power generation relative to the cost of implementing load
`control.
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`JX-0001 (’552 Patent) at 1:27-2:56.
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`The ’552, ’522, and ’268 patents thus conclude that “a need exists for a system and method
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`for active power load management for individual customers that is optionally capable of tracking
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`power savings for the individual customer as well as the electric utility to thereby overcome the
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`shortcomings of the prior art.” JX-0001 (’552 Patent) at 3:30-34.
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`The ’592 patent, which has a different specification than the other three asserted patents,
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`describes the Field of the Invention as follows: “The present invention relates generally to the
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`field of electric power supply and generation systems and, more particularly, to a system and
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`method for estimating and/or providing dispatchable operating reserve energy capacity for an
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`electric utility using active load management so that the reserve capacity may be made available
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`to the utility or to the general power market (e.g., via a national grid).” JX-0004 (’592 Patent) at
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`2:9-15.
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`Prior art shortcomings with respect to power load management are described by the ’592
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`patent:
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`Energy demand within a utility’s service area varies constantly. Such
`variation in demand can cause undesired fluctuations in line frequency if not timely
`met. To meet the varying demand, a utility must adjust its supply or capacity (e.g.,
`increase capacity when demand increases and decrease supply when demand
`decreases). However, because power cannot be economically stored, a utility must
`regularly either bring new capacity on-line or take existing capacity off-line in an
`effort to meet demand and maintain frequency. Bringing new capacity online
`involves using a utility's reserve power, typically called “operating reserve.”
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`….
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`The Federal Energy Reliability Commission (FERC) and NERC [North American
`Electric Reliability Corporation] have proposed the concept of Demand Side
`Management (DSM) as an additional approach to account for changes in demand.
`DSM is a method in which a power utility carries out actions to reduce demand
`during peak periods. Examples of DSM include encouraging energy conservation,
`modifying prices during peak periods, direct load control, and others.
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`Current approaches for using DSM to respond to increases in demand have included
`using one way load switches that interrupt loads, as well as statistics to approximate
`the average amount of projected load removed by DSM. A statistical approach is
`employed because of the utility’s inability to measure the actual load removed from
`the grid as a result of a DSM load control event. In addition, current DSM
`approaches have been limited to use of a single power measuring meter among
`every one hundred (100) or more service points (e.g., residences and/or businesses).
`Accordingly, current DSM approaches are inadequate because they rely on
`statistical trends and sampling, rather than on empirical data, to make projections
`and measure actual load removal events.
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`More recently, FERC and NERC have introduced the concept of flexible load-
`shape programs as a component of DSM. These programs allow customers to make
`their preferences known to the utility concerning timing and reliability of DSM load
`control events. However, DSM approaches utilizing load-shaping programs do not
`meet all of the criteria for implementing regulating reserve or spinning reserve,
`such as being dispatchable within 15 minutes or less. Additionally, in order for a
`generating source to be considered dispatchable energy, it must be forecasted
`twenty-four (24) hours prior to being delivered to a utility. Current DSM
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`approaches do not facilitate accurate forecasting twenty-four (24) hours in advance
`due to their heavy reliance on statistics.
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`JX-0004 (’592 Patent) at 2:19-4:53.
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`The ’592 patent thus concludes “there is a need for utilities to be able to create operating
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`reserve … by using accurate forecasting and flexible load shaping techniques,” and there is a
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`further need to “involve the consumer in a two-way approach in which the consumer can make
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`their energy consumption preferences known and the utility can make use of those preferences to
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`respond to increased demand and maintain line frequency regulation.” JX-0004 (’592 Patent) at
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`4:54-61.
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`E.
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`The Accused Products
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`1. Alarm.com Accused Products
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`The Alarm.com Accused Products are the ADC-T2000 and ADC-T3000 smart thermostats.
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`JX-0015C.6 (Alarm.com Import Stipulation). The ADC-T2000 is also marketed as the Smart
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`Thermostat, Intelligent Thermostat, InTouch Thermostat, ADT Smart Thermostat, or Dreamstat.
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`The ADC-T3000 is also marketed as the