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`Case No. 2:15-CV-00037-RWS-RSP
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`Plaintiffs,
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`§
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`Defendants.
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`
`MEMORANDUM OPINION AND ORDER AND
`REPORT AND RECOMMENDATION
`
`ELBIT SYSTEMS LAND AND C4I LTD.,
`ELBIT SYSTEMS OF AMERICA, LLC,
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`
`
`v.
`
`HUGHES NETWORK SYSTEMS, LLC,
`BLUETIDE COMMUNICATIONS, INC.,
`COUNTRY HOME INVESTMENTS, INC.,
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`
`
`
`
`
`
`
`Before the Court are the following motions:
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`Plaintiffs’ Motion to Strike Expert Opinions Regarding Stricken Prior Art References And
`Undisclosed Invalidity Theories (Dkt. 275) (“Elbit’s Motion to Strike Invalidity
`Opinions”).
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`Defendant Hughes Network Systems, LLC’s Motion to Strike Elbit’s ’874 Patent
`Infringement Contentions (Dkt. 276) (“Hughes’ Motion to Strike Infringement
`Contentions”).
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`Defendant Hughes’s Motion to Exclude Elbit’s New Priority Date Contentions for the ’073
`Patent (Dkt. 277) (“Hughes’ Priority Date Motion”).
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`Defendants’ Motion for Summary Judgment of Noninfringement of the Switching Means
`of United States Patent No. 6,240,073 (Dkt. 291) (“Defendants’ ‘Switching Means’
`Motion”).
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`Defendants Motion for Summary Judgment of Non-Infringement of Claim 28 of the ’073
`Patent for Lack of a “Means For Generating A Request” (Dkt. 292) (“Defendants’ ‘Means
`for Generating Request’ Motion”).
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`Defendants’ Motion for Partial Summary Judgment of Non-Infringement for Hughes’
`GMR-1 Products (Dkt. 293) (“Defendants’ GMR-1 Products Motion”).
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`Defendants’ Motion for Partial Summary Judgment of No Damages With Respect to the
`’874 Patent (Dkt. 294) (“Defendants’ Damages Motion”)
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`1
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`(1)
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`(2)
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`(3)
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`(4)
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`(5)
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`(6)
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`(7)
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 2 of 45 PageID #: 23870
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`(8)
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`(9)
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`Defendant Hughes Network Systems, LLC’s Motion for Summary Judgment of No
`Copying of U.S. Patent No. 6, 240,073 (Dkt. 295) (“Hughes’ Copying Motion”)
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`Defendant Hughes Network Systems, LLC’s Motion for Summary Judgment of No
`Willfulness (Dkt. 296) (“Hughes’ Willfulness Motion”).
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`(10) Defendant Hughes Network Systems, LLC’s Motion for Summary Judgment of No Pre-
`Suit Damages Based on Plaintiffs’ Failure to Comply with 35 U.S.C. § 287 (Dkt. 297)
`(“Hughes’ Marking Motion”).
`
`(11) Defendant Hughes Network Systems, LLC’s Motion for Partial Summary Judgment of
`Non-Infringement of Claims 2-5, 7-9, 11, and 12 of U.S. Patent No. 7,245,874 (Dkt. 298)
`(“Motion for Summary Judgment of Noninfringement of the ’874 Patent”).
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`(12) Plaintiffs’ Motion to Exclude the Testimony of Dr. Stephen B. Wicker (Dkt. 312) (“Elbit’s
`Infringement Expert Motion”).
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`(13) Defendant Hughes Network Systems, LLC’s Motion to Exclude Expert Testimony of
`Stephen G. Kunin (Dkt. 313) (“Hughes’ Motion to Exclude Patent Office Expert
`Testimony”)
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`(14) Defendants’ Daubert Motion to Exclude the Opinions Offered by Christopher Martinez
`(Dkt. 314) (“Defendants’ Motion to Exclude Damages Expert Testimony”).
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`(15) Plaintiffs’ Motion to Strike Defendants’ Experts Opinions Regarding Previously-
`Undisclosed Non-Infringing Alternatives (Dkt. 315) (“Plaintiffs’ Motion to Strike Non-
`Infringing Alternatives”
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`(16) Hughes’ Motion to Strike Portions of Elbit’s Expert Reports that Rely on Previously-
`Unidentified Infringement Theories (Dkt. 316) (“Hughes’ Motion to Strike Infringement
`Opinions”).
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`(17) Plaintiffs’ Motion to Exclude Certain Opinions of Defendants’ Damages Expert, Mr. W.
`Christopher Bakewell (Dkt. 319) (“Elbit’s Motion to Exclude Damages Expert
`Testimony”).
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`(18) Defendants Hughes Network Systems, LLC And BlueTide Communications, Inc.’s Motion
`to Transfer Under 28 U.S.C. § 1406 (Dkt. 372) (“Defendants’ Motion to Transfer”).
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`(19) Defendants Hughes Network Systems, LLC And BlueTide Communications, Inc.’s Motion
`to Stay Proceedings Pending Resolution of Proper Venue (Dkt. 373) (“Defendants’ Motion
`to Stay”).
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`The Court resolves the nondispositive motions and provides recommendations for the
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`pending motions for summary judgment as follows. See Fed. R. Civ. P. 72.
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`2
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 3 of 45 PageID #: 23871
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`TABLE OF CONTENTS
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`BACKGROUND ............................................................................................................................ 4
`DISCUSSION ................................................................................................................................. 4
`A.
`Defendants’ Motions for Summary Judgment ................................................................. 4
`1. Motions for Summary Judgment of Noninfringement of the ’073 Patent .................... 5
`2.
`Defendants’ Damages Motion (Dkt. 294) .................................................................... 8
`3.
`Hughes’ Copying Motion (Dkt. 295) ........................................................................... 9
`4.
`Hughes’ Willfulness Motion (Dkt. 296) ..................................................................... 10
`5.
`Hughes’ Marking Motion (Dkt. 297) ......................................................................... 12
`6. Motion for Summary Judgment of Noninfringement of the ’874 Patent (Dkt. 298) .. 14
`B. Motions to Strike or Exclude Contentions or Opinions ................................................. 15
`1.
`Elbit’s Motion to Strike Invalidity Opinions (Dkt. 275) ............................................ 15
`2.
`Hughes’ Motion to Strike Infringement Contentions (Dkt. 276) ............................... 17
`3.
`Hughes’ Priority Date Motion (Dkt. 277) .................................................................. 18
`4.
`Plaintiffs’ Motion to Strike Non-Infringing Alternatives (Dkt. 315) ......................... 20
`5.
`Hughes’ Motion to Strike Infringement Opinions (Dkt. 316) .................................... 23
`Daubert Motions ............................................................................................................ 27
`C.
`1.
`Elbit’s Infringement Expert Motion (Dkt. 312).......................................................... 27
`2.
`Hughes’ Motion to Exclude Patent Office Expert Testimony (Dkt. 313) .................. 29
`3.
`Defendants’ Motion to Exclude Damages Expert Testimony (Dkt. 314) .................. 31
`4.
`Elbit's Motion to Exclude Damages Expert Testimony (Dkt. 319) ............................ 34
`D.
`Defendants’ Motions to Transfer and Stay (Dkts. 372 and 373) ................................... 36
`1.
`Relevant Procedural Background ............................................................................... 37
`2. Waiver of Venue Defense ........................................................................................... 38
`3.
`Defendants’ Pending Motion to Transfer under § 1404 (Dkt. 130) ........................... 41
`CONCLUSION ............................................................................................................................. 44
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`3
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 4 of 45 PageID #: 23872
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`BACKGROUND
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`This is a patent infringement case brought by Elbit Systems Land and C4I Ltd and Elbit
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`Systems of America LLC (collectively, “Elbit”). Elbit accuses Hughes Networks Systems, LLC
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`(“Hughes”), BlueTide Communications, Inc. (“BlueTide”), and Country Home Investments, Inc.
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`(“Country Home”) of infringing U.S. Patent Nos. 6,240,073 (“the ’073 patent”) and 7,245,874
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`(“the ’874 patent”), both of which relate generally to satellite communication systems.
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`DISCUSSION
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`A. Defendants’ Motions for Summary Judgment
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`Defendants move for summary judgment on various claims and issues underlying Elbit’s
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`infringement and damages contentions. Summary judgment must be granted when there is no
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`genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.
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`Fed. R. Civ. P. 56(c). “A genuine issue of material fact exists ‘if the evidence is such that a
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`reasonable jury could return a verdict for the non-moving party.’” Crawford v. Formosa Plastics
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`Corp., La., 234 F.3d 899, 902 (5th Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
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`242, 248 (1986)). The court must consider evidence in the record in the light most favorable to the
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`non-moving party and draw all reasonable inferences in favor of that party. Thorson v. Epps, 701
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`F.3d 444, 445 (5th Cir. 2012). The moving party must identify the portions of the record that
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`demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S.
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`317, 323 (1986). Once a party has made that showing, the non-moving party bears the burden of
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`establishing otherwise. Geiserman v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990) (citing
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`Celotex, 477 U.S. at 323). The non-moving party cannot “rest upon mere allegations or denials”
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`in the pleadings, but “must set forth specific facts showing there is a genuine issue for trial.”
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`Liberty Lobby, 477 U.S. at 248. Thus, summary judgment “is appropriate if the non-movant ‘fails
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`4
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 5 of 45 PageID #: 23873
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`to make a showing sufficient to establish the existence of an element essential to that party’s case.’”
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`Bluebonnet Hotel Ventures, LLC v. Wells Fargo Bank, N.A., 754 F.3d 272, 276 (5th Cir. 2014)
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`(quoting Celotex, 477 U.S. at 322).
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`1. Motions for Summary Judgment of Noninfringement of the ’073 Patent
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`a) Defendants’ “Switching Means” Motion (Dkt. 291)
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`The asserted ’073 patent claims recite a “switching means . . . for switching transmission
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`between said first communication means and said second communication means in accordance
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`with predefined criteria.” See, e.g., ’073 patent at 22:66-23:2. The Court construed the switching
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`means limitation as a means-plus-function term governed by 35 U.S.C. § 112, ¶ 6. Dkt. 208, at 30.
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`The Court defined the corresponding structure as “modem 160 or PC 150 including driver layer
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`158 performing the algorithms disclosed in the ’073 Patent at 10:30-11:40 or Figure 8, and
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`equivalents thereof.” Id. Hughes contends that “[i]n the ’073 Patent, the modem 160 and the PC
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`150 are part of the terminal and not part of the hub.” See Dkt. 291 at 4 (citing ’073 Patent, Fig. 7).
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`According to Hughes, Elbit has failed to identify “switching means” structure at or within the
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`terminal, but rather only identifies structure at the hub, and thus summary judgment of
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`noninfringement should be granted Id. at 9.
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`Elbit’s expert, Bruce Elbert, opines to the contrary. Mr. Elbert explains that the accused
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`terminals begin transmitting in random access mode, and when a terminal receives user data, the
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`terminal compares the size of the data to the amount of space in the Aloha transmission. See Dkt.
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`318-2 ¶¶ 301-19. Based on that comparison, Mr. Elbert opines that the terminal decides whether
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`to switch to an allocated channel, depending on whether the user data fit within the Aloha
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`transmission. Id. The terminal then allegedly waits for the hub to acknowledge that a specific
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`channel has been assigned. Id. This algorithm, according to Mr. Elbert, is consistent with the one
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`5
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 6 of 45 PageID #: 23874
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`disclosed in the ’073 patent at 10:30-11:40. See Dkt. 318 at 8. Mr. Elbert’s testimony attributes the
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`decision to switch transmission to the terminal, and thus this testimony “at least raises a genuine
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`issue of material fact” concerning infringement. See Vasudevan Software, Inc. v. MicroStrategy,
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`Inc., 782 F.3d 671, 683 (Fed. Cir. 2015).
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`Hughes argues Elbit is estopped from making such arguments because of statements Elbit
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`made during inter partes review. This argument is are not persuasive. Mr. Elbert’s testimony
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`appears consistent with representations Elbit made to the Patent Office concerning where the
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`decision to switch occurs. The Court therefore RECOMMENDS Defendants’ “Switching Means”
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`Motion be denied.
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`b) Defendants’ “Means for Generating Request” Motion (Dkt. 292)
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`Claim 28 of the ’073 patent recites a “means for generating a request.” This means-plus-
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`function limitation corresponds to algorithms described in the specification. One algorithm
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`requires that the generated request include a requested date. See Dkt. 292 at 1. The other alternative
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`algorithm requires the request to be based on an evaluation of a port number. See id. Hughes argues
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`the accused terminals do not generate a request including a requested data rate or port number. See
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`id. Thus, according to Hughes, summary judgment of noninfringement of claim 28 should be
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`granted.
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`Elbit’s expert testimony, however, raises a material factual dispute. Mr. Elbert explains
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`how the accused products satisfy the “means for generating a request” limitation, and Mr. Elbert
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`includes an analysis of how the accused structures are equivalent to the structure corresponding to
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`the claim limitation. See Dkt. 318-2 ¶¶ 451-54, 458-61. Infringement under the doctrine of
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`equivalents is a “highly factual inquiry.” Jeneric/Pentron, Inc. v. Dillon Co., Inc., 205 F.3d 1377,
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`1384 (Fed. Cir. 2000). Mr. Elbert’s testimony suggesting that the “means for generating” limitation
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`6
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 7 of 45 PageID #: 23875
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`is met under the function-way-results or substantial similarity tests precludes the grant of summary
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`judgment. See Vasudevan Software, 782 F.3d at 683 (Fed. Cir. 2015). The Court therefore
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`RECOMMENDS Defendants’ “Means for Generating Request” Motion be denied.
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`c) Defendants’ GMR-1 Products Motion (Dkt. 293)
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`Defendants explain that Elbit originally accused Hughes’ products that comply with the
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`GMR-1 standard of infringing the ’073 patent. Dkt. 293 at 1. Elbit did not, however, include
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`opinions concerning these infringement theories in its expert report, and Elbit acknowledges that
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`it will not pursue such theories at trial. Id. As a result, Defendants contend they are entitled to
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`summary judgment of noninfringement as to the GMR-1 products. Id.
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`The Court disagrees. Elbit voluntarily dropped the GMR-1 products before expert
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`discovery—an action that is similar to amending a complaint or voluntarily dismissing claims
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`without prejudice. See Sandisk Corp v. Kingston Tech. Co., 695 F. 3d 1348, 1353 (treating a
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`plaintiff’s withdrawal of asserted claims “as being akin to either a [Fed. R. Civ. P.] 15 amendment
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`to the complaint, or a Rule 41(a) voluntary dismissal of claims without prejudice”) (citations
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`omitted). Defendants highlight that Elbit refuses to enter into a stipulation dismissing the GMR-1
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`products from the case, but Defendants do not cite authority suggesting Elbit has an obligation to
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`do so. See Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1193 (Fed. Cir. 2014) (“[W]e
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`have not previously held that a formal motion or stipulation was required to remove claims from
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`a case and we decline to do so here. On the contrary, we recently decided that a patentee’s
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`announcement that it was no longer pursuing certain claims, coupled with its ceasing to litigate
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`them, was sufficient to remove those claims from the case even without such formalities.”). The
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`Court therefore RECOMMENDS Defendants’ GMR-1 Products Motion be denied.
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 8 of 45 PageID #: 23876
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`2. Defendants’ Damages Motion (Dkt. 294)
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`Hughes contends that it is entitled to summary judgment of no damages arising from the
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`alleged infringement of the ’874 patent because Elbit’s damages expert, Mr. Christopher Martinez,
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`“offers no opinion on damages for the ’874 Patent.” Dkt. 294 at 1. According to Hughes, there is
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`no other evidence in the record on which Elbit may rely, and thus summary judgment of no
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`damages is appropriate. Id.
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`Hughes’ own damages expert’s report, however, is part of the summary judgment record,
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`and the report includes Mr. Christopher Bakewell’s opinion that the appropriate royalty for the
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`“alleged infringement of the patents-in-suit is a lump-sum of no greater than $3.5 million, which
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`can be allocated as $2.5 million for the ’073 patent and $1 million for the ’874 patent.” Dkt. 319-
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`1 ¶ 559. Hughes argues this report is not competent summary judgment evidence because it is
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`hearsay, but Hughes’ argument appears to conflict with Fifth Circuit law finding an opponent’s
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`expert’s statement admissible under Rule 801(d)(2)(c). See, e.g., Collins v. Wayne Corp., 621 F.2d
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`777, 782 (5th Cir. 1980) (statement by expert nonhearsay because expert “was performing the
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`function that [the party opponent] had employed him to perform.”).
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`The Court need not reach the hearsay issue, however, because there is other summary
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`judgment evidence suggesting that a zero royalty is not the only reasonable royalty for the ’874
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`patent. Mr. Bakewell opines that products accused of infringing the ’874 patent “are a subset of
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`those that are accused of infringing the ’073 patent.” See Dkt. 319-1, ¶ 325. Mr. Martinez opines
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`that the parties would have had a single hypothetical negotiation for both asserted patents, and
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`Mr. Martinez’s testimony can be regarded as proffering a non-zero royalty opinion for the ’874
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`patent; otherwise, there would have been no need to opine that a “joint” hypothetical negotiation
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`for both asserted patents would have occurred. See Dkt. 321 at 4.
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`8
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 9 of 45 PageID #: 23877
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`“At summary judgment, as is the case here, a judge may only award a zero royalty for
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`infringement if there is no genuine issue of material fact that zero is the only reasonable royalty.”
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`Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1328 (Fed. Cir. 2014). The contrary authority cited
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`by Hughes—Unicom Monitoring, LLC v. Cencom, Inc., No. CIV.A. 06-1166 MLC, 2013 WL
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`1704300, at *6 (D.N.J. Apr. 19, 2013)—was decided before Apple. Indeed, Unicom relies on the
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`summary judgment decision vacated by the panel in Apple, i.e., Apple, Inc. v. Motorola Inc., 869
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`F.Supp.2d 901 (N.D.Ill.2012) (Posner, J., sitting by designation). In sum, because the summary
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`judgment evidence does not suggest that zero is the only reasonable royalty for the ’874 patent,
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`the Court RECOMMENDS Defendants’ Damages Motion be denied.
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`3. Hughes’ Copying Motion (Dkt. 295)
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`Hughes seeks summary judgment that Hughes did not copy the invention claimed in the
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`’073 patent, which, according to Hughes, should preclude Elbit from relying on copying as
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`objective evidence of nonobviousness. See Dkt. 295. Hughes contends Elbit has not shown
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`copying of “a specific product,” id. at 5, because Shiron (Elbit’s predecessor) “did not have a
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`product practicing the ’073 Patent until 2003, two years after Hughes began selling the allegedly
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`infringing [product],” Dkt. 324 at 1.
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`To establish copying, a patent owner may present evidence that an accused infringer
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`replicated the patentee’s product rather than independently develop its own product. See Wyers v.
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`Master Lock Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010). The patent owner need not establish that
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`the accused infringer copied a specific physical product embodied by an issued patent—copying a
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`written formula or prototype is sufficient, for example. Advanced Display Systems, Inc. v. Kent
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`State University, 212 F.3d 1272, 1276 (Fed. Cir. 2000). Indeed, an accused infringer’s efforts to
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 10 of 45 PageID #:
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`replicate a claimed invention from the disclosure in a patent or patent application may be sufficient.
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`DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1328-29 (Fed. Cir. 2009).
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`Consistent with this standard, Elbit presents evidence of a presentation (albeit before the
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`’073 patent issued) in which Shiron showed Hughes a confidential proposal for a “high-speed
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`return link via satellite” product, similar to the written formula in Advanced Display Systems. See
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`212 F.3d at 127; Dkt. 322 at 19. Elbit also presents evidence that Hughes was generally familiar
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`with Shiron and Elbit’s products and, on one occasion in 2014, compared Hughes’ products with
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`Elbit’s products as part of an effort to secure a contract. See Dkt. 295-8 at 14.
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`Hughes and Elbit are competitors, which gives credence to this evidence. See WBIP, LLC
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`v. Kohler Co., 829 F.3d 1317, 1336 (Fed. Cir. 2016) (“The fact that a competitor copied technology
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`suggests it would not have been obvious.”). Hughes contends that Elbit fails to show a nexus
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`between the alleged copying and the patented invention, but Elbit provides reasonably-supported
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`expert testimony on the matter, thus reducing the dispute to a factual one for the jury to resolve.
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`See Dkt. 322; WBIP, 829 F.3d at 1336 (“Copying is a question of fact and, as with any question of
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`fact, the fact-finder (here, the jury) was entitled to credit WBIP’s evidence over Kohler’s.”). The
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`Court therefore RECOMMENDS Hughes’ Copying Motion be denied.
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`4. Hughes’ Willfulness Motion (Dkt. 296)
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`Hughes seeks summary judgment of no willfulness because Elbit “cannot point to evidence
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`that is sufficient, as a matter of law, to show that Hughes willfully infringed” the asserted patents.
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`Dkt. 296 at 1. In response to Hughes’ motion, Elbit highlights evidence supporting its contention
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`that Hughes knew the asserted patents were valid and infringed. For example, Elbit points to
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`evidence that its predecessor, Shiron, presented an embodiment of the ’073 patent to Hughes’
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`senior executives in 1997, that Hughes had knowledge of the asserted patents through
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 11 of 45 PageID #:
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`correspondence between Hughes’ in-house counsel and Shiron’s agent, and that Hughes’ in-house
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`counsel and senior engineers possessed claim charts detailing how Hughes’ products are
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`encompassed by the asserted patent claims. See, e.g., Dkt. 322 at 2-3, 6-9.
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`There is sufficient evidence to create a fact dispute as to Hughes’ state of mind before
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`beginning the allegedly infringing conduct. Determining willfulness is a fact-based endeavor.
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`Hughes argues that it had good faith reasons to believe that the patent did not encompass the
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`accused system and that the patent was invalid. See Dkt. 296. Indeed, Hughes’ summary judgment
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`motions of noninfringement provide support for the contention that it was at least not clear that the
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`asserted patents were both valid and infringed. The Supreme Court has explained, however, that
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`the issue of willfulness turns not on the objective reasonableness of a defendant’s conduct, but on
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`the defendant’s subjective beliefs. Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933
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`(2016) (“The subjective willfulness of a patent infringer, intentional or knowing, may warrant
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`enhanced damages, without regard to whether his infringement was objectively reckless.”).
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`A jury might conclude from Hughes’ objective evidence that Hughes did not subjectively
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`believe it was infringing a valid patent. See WesternGeco L.L.C. v. Ion Geophysical Corp., 837
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`F.3d 1358, 1363 (Fed. Cir. 2016) (even after Halo, the objective reasonableness of the accused
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`infringer’s positions can still be relevant to § 284). But Hughes has not offered other summary
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`judgment evidence regarding its executives’ subjective beliefs. Given the state of the evidence, the
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`Court cannot conclude that it would be unreasonable for a jury to find Hughes knew the asserted
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`patents were valid and infringed. The Court therefore RECOMMENDS Hughes’ Willfulness
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`Motion be denied.
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`The Court is nevertheless mindful of the Supreme Court’s clarification that case law has
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`channeled courts’ discretion in granting enhanced damages under § 284—limiting the award of
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`such damages “to egregious cases of misconduct beyond typical infringement.” Halo, 136 S. Ct.
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`at 1935. The Court will be in a better position after receiving the evidence at trial to determine
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`whether Elbit has demonstrated the level of willfulness necessary to warrant enhanced damages if
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`Elbit prevails.
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`5. Hughes’ Marking Motion (Dkt. 297)
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`Hughes moves for summary judgment of no pre-suit damages under the ’073 patent
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`because Elbit allegedly failed to comply with the notice requirements of the marking statute, 35
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`U.S.C. § 287(a). According to Hughes, because Elbit failed to comply with the statute, damages
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`may only accrue from January 21, 2015, the date Elbit filed suit.
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`“The patent marking statute limits recoverable damages where a patentee fails to mark her
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`patented products.” Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348,
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`1378 (Fed. Cir. 2013) cert. denied, 134 S. Ct. 900 (2014). “Where a patentee does not appropriately
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`mark her products, she may not recover damages for infringement occurring before notice to the
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`infringer.” Id. The statute provides two ways to provide notice: a patentee can (1) provide actual
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`notice; or (2) provide constructive notice “by affixing . . . the word ‘patent‘ or the abbreviation
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`‘pat.’, together with the number of the patent” on patented articles sold by the patentee or its
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`licensees. 35 U.S.C. § 287. “[A] party that does not mark a patented article is not entitled to
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`damages for infringement prior to actual notice.” Crown Packaging Tech., Inc. v. Rexam Beverage
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`Can Co., 559 F.3d 1308, 1316 (Fed. Cir. 2009).
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`“For purposes of section 287(a), [actual] notice must be of ‘the infringement,’ not merely
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`notice of the patent’s existence or ownership. Actual notice requires the affirmative
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`communication of a specific charge of infringement by a specific accused product or device.”
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`Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994) (quoting
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 13 of 45 PageID #:
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`§ 287(a)). “It is irrelevant . . . whether the defendant knew of the patent or knew of his own
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`infringement. The correct approach to determining notice under section 287 must focus on the
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`action of the patentee, not the knowledge or understanding of the infringer.” Id.
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`Elbit identifies sufficient summary judgment evidence to create a fact dispute concerning
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`whether Hughes had actual notice of the ’073 patent and the charge of infringement. A juror could
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`conclude that iLeverage’s former CEO, Uzi Aloush, provided actual notice sufficient to satisfy the
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`marking statute. Mr. Aloush testified that iLeverage “had the right to act as the exclusive
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`worldwide agent to commercialize” the ’073 patent. See Dkt. 322-11 at 35:24-36:8. Mr. Aloush
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`explained that during talks with Hughes about a license to the ’073 patent, he told Hughes that it
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`infringed the patent. See id. at 139:2-140:9. Hughes corroborates that such talks took place through
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`an interrogatory response stating that “[i]n 2008, Hughes was approached by iLeverage regarding
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`Shiron’s patents, including U.S. Patent Nos. 6,240,073 or 7,245,874. At that time, Hughes
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`communicated with iLeverage regarding U.S. Patent Nos. 6,240,073 or 7,245,874.” Dkt. 322-25
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`at 24.
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`Hughes’ argument in response to this evidence is that § 287 is an affirmative step that must
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`be taken by the patentee, and that the iLeverage talks do not qualify because iLeverage “did not
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`have authority from Shiron to accuse Hughes of infringement.” Dkt. 324 at 8. To support this
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`argument, Hughes cites the following testimony from Mr. Aloush’s deposition:
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`Q: You did not have any authority from Shiron to make any
`accusation of patent infringement; is that correct?
`A: We were brokers. We were not lawyers. It was not a cease and
`desist letter. It was just an offer for sale.
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`Dkt. 297-8 at 156:14-157:17. This testimony, however, does not suggest that iLeverage could not
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`have provided actual notice of the patent and the charge of infringement, as Shiron’s agent, in a
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`manner sufficient to comply with the marking statute.
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`If Hughes is arguing that iLeverage would not have been considered an effective patentee
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`when it offered to sell the system allegedly covered by the ’073 patent, Hughes’ argument is not
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`clear. “[I]f the patentee transfers all substantial rights under the patent, it amounts to an assignment
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`and the assignee may be deemed the effective patentee under 35 U.S.C. § 281 for purposes of
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`holding constitutional standing to sue another for patent infringement in its own name.” See, e.g.,
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`Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed. Cir. 2005). It follows that if an
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`effective patentee provides actual notice of the patent and the charge of infringement, the marking
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`statute could have been satisfied. Mr. Aloush described iLeverage as Shiron’s “exclusive agent,”
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`and Hughes has not met its summary judgment burden of establishing that iLeverage could not
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`have been an effective patentee. A material fact issue as to the scope and extent of iLeverage’s
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`agency relationship exists. If iLeverage was effectively the patentee for purposes of standing, a
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`reasonable juror could conclude that iLeverage provided actual notice of the ’073 patent and the
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`charge of infringement. The Court therefore RECOMMENDS Hughes’ Marking Motion be
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`denied.
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`6. Motion for Summary Judgment of Noninfringement of the ’874 Patent (Dkt. 298)
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`Hughes moves for partial summary judgment of noninfringement of claims 2-5, 7-9, 11,
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`and 12 of the ’874 patent. Hughes explains that each of these claims depends from a claim requiring
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`“conversion between two protocols,” namely “E1” and “TCP/IP.” Dkt. 298 at 1. According to
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`Hughes, “[t]he third party devices provided by Hughes do not convert to or use TCP/IP for cellular
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`backhaul under any circumstances.” Id. “Instead, they use a different protocol known as UDP.” Id.
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`Thus, according to Hughes, “Elbit has no evidence of infringement of the dependent claims of the
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`’874 patent.” Id.
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`The Court does not agree. Both Elbit’s and Hughes’ technical experts agree that “TCP/IP
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`refers to a suite of protocols that may be used to interconnect network devices on the Internet.”
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`Case 2:15-cv-00037-RWS-RSP Document 388 Filed 06/20/17 Page 15 of 45 PageID #:
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`See Dkt. 321 at 5-6 (citing expert reports). On the basis of the summary judgment record, a
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`reasonable juror could therefore conclude that UDP is a member of the TCP/IP family, and that if
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`the accused products convert to the UDP protocol, they are encompassed by claims 2-5, 7-9, 11,
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`and 12 of the ’874 patent.
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`To the extent Hughes’ motion for summary judgment is based on an untimely claim
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`construction position regarding the meaning of “TCP/IP,” as that term is used in the asserted
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`claims, Hughes waived these arguments by not raising them earlier. See, e.g., Cent. Admixture
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`Pharmacy Servs., Inc. v. Advanced Cardiac Sols., P.C., 482 F.3d 1347, 1356 (Fed. Cir. 2007)
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`(“The district court found that [defendants] waived any argument with respect to this term by
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`failing to raise it during the claim construction phase. We agree.”); Fenner Inv., Ltd. v. Microsoft
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`Corp., 632 F. Supp. 2d 627, 638 (E.D. Tex. 2009) (“Because this argument is contrary to the claim
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`construction order and was not raised prior to or even following the claim construction hearing it
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`is waived.”), aff’d sub nom. Fenner Investments, Ltd. v. Microsoft Corp., 369 F. App’x 132 (Fed.
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`Cir. 2010). The Court therefore RECOMMENDS Hughes’ Motion for Summary Judgment of
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`Noninfringement of the ’874 Patent be denied.
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`B. Motions to Strike or Exclude Contentions or Opinions
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`1. Elbit’s Motion to Strike Invalidity Opinions (Dkt. 275)
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`Elbit asks the Court to strike the following two portions of Dr. Stephen Wicker’s expert
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`report: (1) prior art references previously struck by the Court because Hughes failed to disclose
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`the references through invalidity contentions, namely U.S. Patent No. 5,978,386 (“Hämäläinen”)
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`and U.S. Patent No. 7,050,456 (“Sprague”); and (2) a prior art product known as