Dialect, LLC v. Amazon.com, Inc.

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DIALECT, LLC, Plaintiff, v. AMAZON.COM, INC., et al., Defendants.

CIVIL No. 1:23cv581 (DJN)

United States District Court, E.D. Virginia, Alexandria Division

August 21, 2024

MEMORANDUM OPINION

David J. Novak United States District Judge

The Court previously resolved the first of two motions for summary judgment in this patent case filed by Defendants Amazon.com, Inc. and Amazon Web Services, Inc. (together “Amazon”). (ECF No. 393.) Now, this matter comes before the Court on the second of those motions (ECF No 306), in which Amazon raises three grounds for summary judgment. On Amazon's first ground, the Court agrees that insufficient evidence of scienter precludes liability under § 271(f), and therefore, Dialect cannot recover damages related to foreign sales. On its second ground, the Court concludes that Amazon has not proved its enablement defense with sufficient rigor at this stage to warrant summary judgment; the issue of enablement must be presented to the jury. Finally, on Amazon's third challenge regarding pre-suit damages, the Court finds no genuine dispute between the parties following the Court's decision on Amazon's first motion for summary judgment; consequently the Court denies this argument as moot. Accordingly, the Court will grant in part and deny in part Amazon's second summary judgment motion.^[1]

I. BACKGROUND

The facts of this case have been related elsewhere. See, e.g Dialect, LLC v. Amazon.com, Inc. (1st Summ. J. Op.), 2024 WL 3733437, at *1-7 (E.D. Va. July 30, 2024) (ECF No. 407).^[2] As such, the Court assumes the reader's familiarity with the underlying proceedings and the Asserted Patents, so this section recounts only that necessary to resolve the current motion. In short, Amazon owns, sells and develops a proprietary virtual assistant, Alexa, that analyzes and responds to spoken words. Amazon incorporates Alexa into popular products like Amazon Echo and Amazon Fire TV. Dialect claims that Alexa, and therefore Amazon, infringes patents that had been assigned to Dialect by a now-defunct firm called VoiceBox, LLC. Accordingly, Dialect sued.

Initially, Dialect asserted seven different patents. At the motion to dismiss stage, Senior District Judge T.S. Ellis, III invalidated one of those patents, U.S. Patent No. 9,031,845, as being drawn to patent-ineligible subject matter. Dialect, LLC v. Amazon.com, Inc., 701 F.Supp.3d 332,342 (E.D. Va. 2023). After this case was transferred to the undersigned (ECF No. 137), the Court dismissed another patent, U.S. Patent No. 8,140,327 (the “'327 Patent”), upon finding that Amazon's products did not infringe that patent as a matter of law. 1st Summ. J. Op., 2024 WL 3733437, at *19-22. Five patents (the “Asserted Patents”) thus remain in controversy.^[3]

II. STANDARD

The summary judgment posture governs. Accordingly, the movant prevails if it can demonstrate the absence of any “genuine dispute of material fact” and that it stands “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). All “justifiable inferences must be drawn in favor of the party opposing summary judgment, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), and the Court must not “weigh the evidence[] or resolve factual disputes in [Amazon's] favor.” Hensley ex rel. North Carolina v. Price, 876 F.3d 573,579 (4th Cir. 2017).

Summary judgment can be sought on any claim, defense or issue, but the nature of the parties' burdens of proof at trial determine how a summary judgment motion should be resolved. When a defendant seeks summary judgment on an issue constituting part of the plaintiff's case in chief, that defendant need only identify “an absence of evidence” to support the plaintiff's case, at which point the plaintiff must respond by producing evidence that, if believed by a reasonable jury, would justify finding in the plaintiff's favor at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23,325 (1986).

Summary judgment on an affirmative defense, like Amazon's enablement defense, involves a different standard. In that case, the defendant “must conclusively establish all essential elements of [its] defense” and carry its burden of production. Ray Commc'ns, Inc. v. Clear Channel Commc'ns, Inc., 673 F.3d 294,299 (4th Cir. 2012). Additionally, Amazon's enablement defense must overcome the Asserted Patents' presumption of validity by proving all facts underpinning that defense by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91,96-97 (2011); see Baxalta Inc. v. Genentech, Inc., 81 F.4th 1362,1365 (Fed. Cir. 2023) (applying i4i). Because the Court must “view the evidence presented [on summary judgment] through the prism of the substantive evidentiary burden,” Amazon must convince the Court that any reasonable jury would have to find its evidence of non-enablement clearly and convincingly proven. Anderson, 477 U.S. at 254-55. Dialect, on the other hand, needs only to persuade the Court that a reasonable jury could find the facts supporting non-enablement less that clear and convincing if Amazon's evidence were disregarded and Dialect's accepted.

III. ANALYSIS

Amazon's motion advances three arguments: first, that Amazon has no liability as a matter of law for exporting “components of a patented invention” under 35 U.S.C. § 271(f); second, that each of Dialect's claims rests on patents that must be found invalid for lack of enablement under 35 U.S.C. § 112(a); and third, that Dialect cannot recover pre-suit damages for three patents, because Dialect violated the “marking” requirement of 35 U.S.C. § 287(a). The Court considers each in turn.

A. Infringement Abroad

Dialect pleads, as relevant here, that Amazon infringes the Asserted Patents by uploading Alexa software onto foreign servers and into “the cloud,” such that foreign Amazon devices practice the patents' claimed inventions when accessing that U.S.-programmed code. Courts have long held, however, that American patent rights cannot “operate beyond the limits of the United States,” Brown v. Duchesne, 60 U.S. (19 How.) 183, 195 (1856), and are not infringed by “acts wholly done in a foreign country.” Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641,650 (1915). Now, as then, the principle that “no infringement occurs when a patented product is made and sold in another country” governs almost all of patent litigation. Microsoft Corp. v. AT & T Corp., 550 U.S. 437,441 (2007). In 1984, Congress crafted the only two exceptions to that rule: 35 U.S.C. § 271(f)(1) and (2). Id. at 444; Patent Law Amendments Act of 1984, Pub. L. No. 98-622, § 101(a), 98 Stat. 3383,3383. Dialect's infringement-by-uploading theory seeks to invoke those two provisions, but Amazon contends that Dialect cannot avail itself of either one.

Before embarking on its substantive analysis, the Court details the statutory history of § 271(f). Congress enacted § 271(f) as “a response” to the Supreme Court's decision in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). S. Rep. No. 98-633, at 2-3 (1984); Microsoft, 550 U.S. at 442-45 (same). Deepsouth interpreted 35 U.S.C. § 271(a), which at that time deemed a person who made, used or sold ‘“any patented invention, within the United States'” a “direct” infringer. 406 U.S. at 522,527 (quoting 35 U.S.C. § 271(a) (1970)). Deepsouth, the petitioner in that case, manufactured all of the components of a patented combination within the United States. Id. at 523. None of the components stood subject to a patent by itself; infringement occurred only when a person put the parts together to form the patented machine. Id. Deepsouth exported these components to its customers abroad, who would then build the patented machine outside of the United States — a scheme that Deepsouth admitted was “motivated by a desire to avoid” the patent laws. Id. at 523-24 & n.5. Deepsouth sought “judicial approval” of this practice over the objection of Laitram, the respondent and patent owner. Id at 524. The Supreme Court agreed with Deepsouth. Id. at 525. As the Court explained, “a combination patent can be infringed only by combination,” and the infringing combination at issue was made outside of the United States and thus beyond the reach of § 271. Id at 532.

As the Senate Judiciary Committee correctly understood, Deepsouth “interpreted the patent law not to make it infringement when the final assembly and sale [of a patented combination] is abroad.” S. Rep. No. 98-633, at 3. At least some members of Congress believed that a legislative response was necessary to avoid “the subterfuge... allowed under the Deepsouth [decision],” and they proposed a statute that they intended to “amend[] the patent law” to impose liability in cases where “components are supplied for assembly abroad to circumvent a patent” Id. Section 271(f) was the result. Now, the Patent Act contains two forms of liability for exporting parts of patented inventions:

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part knowing that such component is so made or adapted and in

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