Leader Technologies Inc. v. Facebook Inc.

770 F.Supp.2d 686

LEADER TECHNOLOGIES, INC., a Delaware corporation, Plaintiff and Counterdefendant,

v.FACEBOOK, INC., a Delaware corporation, Defendants and Counterclaimant.

Civil Action No. 08–862–LPS.

United States District Court, D. Delaware.

March 14, 2011.

Paul J. André, Esquire and Lisa Kobialka, Esquire of King & Spalding LLP, Redwood Shores, CA, Philip A. Rovner, Esquire and Jonathan A. Choa, Esquire of Potter Anderson & Corroon LLP, Wilmington, DE, for Plaintiff and Counterdefendant, Leader Technologies, Inc.Michael G. Rhodes, Esquire; Heidi L. Keefe, Esquire; Mark R. Weinstein, Esquire and Jeffrey T. Norberg, Esquire of Cooley LLP, Palo Alto, CA, Steven L. Caponi, Esquire of Blank Rome LLP, Wilmington, DE, for Defendant and Counterclaimant, Facebook, Inc.STARK, District Judge:

This action was brought by Plaintiff Leader Technologies, Inc. (“Leader”) against Defendant Facebook, Inc. (“Facebook”) alleging that Facebook's website, available at www. facebook. com, infringes claims 1, 4, 7, 9, 11, 16, 21, 23, 25, 31, and 32 of U.S. Patent No. 7,139,761 (the “'761 patent”). A seven-day jury trial was held, and the jury returned a verdict finding that Facebook literally infringed each asserted claim of the ' 761 patent, but did not control or direct either its employees or its end users. The jury also concluded that the '761 patent was not invalid based on anticipation and obviousness, but was invalid based on the on sale bar and public use bar. Following the jury's verdict, Facebook filed four Renewed Motions For Judgment As A Matter Of Law (D.I. 628, 629, 630, 631) and completed briefing on a Motion For Summary Judgment Of Invalidity Of Claims 1, 4, 7, 21, 23, 25, 31 And 32 Of U.S. Patent No. 7,139,761 [Summary Judgment Motion No. 1] (D.I. 382) in accordance with the Court's instructions. In addition, Leader filed one Renewed Motion For Judgment As A Matter Of Law Or A New Trial (D.I. 626).

For the reasons discussed, Facebook's Renewed Motion For Judgment As A Matter Of Law Of No Indirect Infringement (D.I. 630) will be granted and Facebook's remaining Motions will be denied to the extent they seek judgment as a matter of law and denied as moot to the extent they seek a new trial. In addition, Leader's Renewed Motion For Judgment As A Matter Of Law Or A New Trial (D.I. 626) will be denied.

LEGAL STANDARDS

I. Motion For Judgment As A Matter Of Law

To prevail on a renewed motion for judgment as a matter of law following a jury trial, the moving party “ ‘must show that the jury's findings, presumed or express, are not supported by substantial evidence or, if they were, that the legal conclusions implied [by] the jury's verdict cannot in law be supported by those findings.’ ” Pannu v. Iolab Corp., 155 F.3d 1344, 1348 (Fed.Cir.1998) (quoting Perkin–Elmer Corp. v. Computervision Corp., 732 F.2d 888, 893 (Fed.Cir.1984)); accord Price v. Delaware Department of Correction, 40 F.Supp.2d 544, 549 (D.Del.1999). In assessing the sufficiency of the evidence, the court must give the non-moving party, “as [the] verdict winner, the benefit of all logical inferences that could be drawn from the evidence presented, resolve all conflicts in the evidence in his favor, and in general, view the record in the light most favorable to him.” Williamson v. Consolidated Rail Corp., 926 F.2d 1344, 1348 (3d Cir.), reh'g en banc denied, 1991 U.S.App. LEXIS 16758 (3d Cir.1991); see also Perkin–Elmer Corp., 732 F.2d at 893. The court may not evaluate the credibility of the witnesses, may not weigh the evidence, and may not substitute its view of the evidence for the jury's view. See Price, 40 F.Supp.2d at 550. Rather, the court must determine whether the evidence reasonably supports the jury's verdict. See Dawn Equip. Co. v. Kentucky Farms, Inc., 140 F.3d 1009, 1014 (Fed.Cir.1998); Gomez v. Allegheny Health Servs. Inc., 71 F.3d 1079, 1083 (3d Cir.1995) (describing standard as “whether there is evidence upon which a reasonable jury could properly have found its verdict”); 9A Wright & Miller, Federal Practice & Procedure § 2524 at 249–66 (3d ed.1995) (“The question is not whether there is literally no evidence supporting the party against whom the motion is directed, but whether there is evidence upon which the jury properly could find a verdict for that party.”).

II. Motion For A New Trial

In pertinent part, Federal Rule of Civil Procedure 59(a) provides:

A new trial may be granted to all or any of the parties and on all or part of the issues in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.

Among the most common reasons for granting a new trial are: (1) the jury's verdict is against the clear weight of the evidence, and a new trial must be granted to prevent a miscarriage of justice; (2) newly discovered evidence exists that would likely alter the outcome of the trial; (3) improper conduct by an attorney or the court unfairly influenced the verdict; or (4) the jury's verdict was facially inconsistent. See Zarow–Smith v. New Jersey Transit Rail Operations, 953 F.Supp. 581, 584 (D.N.J.1997).

The decision to grant or deny a new trial is committed to the sound discretion of the district court. See Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980); Olefins Trading, Inc. v. Han Yang Chem. Corp., 9 F.3d 282 (1993) (reviewing district court's grant or denial of new trial motion under deferential “abuse of discretion” standard). However, where the ground for a new trial is that the jury's verdict was against the great weight of the evidence, the court should proceed cautiously, because such a ruling would necessarily substitute the court's judgment for that of the jury. See Klein v. Hollings, 992 F.2d 1285, 1290 (3d Cir.1993). Although the standard for grant of a new trial is less rigorous than the standard for grant of judgment as a matter of law in that the court need not view the evidence in the light most favorable to the verdict winner, a new trial should only be granted where “a miscarriage of justice would result if the verdict were to stand,” the verdict “cries out to be overturned,” or where the verdict “shocks [the] conscience.” Williamson, 926 F.2d at 1352; see also Price, 40 F.Supp.2d at 550.

DISCUSSION

I, Facebook's Renewed Motion For Judgment As A Matter Of Law Of No Direct Infringement (D.I. 628) [Motion No. 1 of 4]A. Parties' Contentions

By its Motion, Facebook contends that the asserted claims of the '761 patent can only be infringed by Facebook through the combination of actions by Facebook and its end users. At trial, the jury concluded that Leader did not establish, by a preponderance of the evidence, that Facebook “controls or directs the actions of Facebook end users and/or Facebook employees.” (D.I. 610, Question # 3) As a result of the jury's finding on this specific question and in light of Federal Circuit case law, Facebook contends that it is entitled to judgment as a matter of law on the issue of direct infringement.

In response, Leader contends that Facebook's Motion rests on the erroneous application of the standard for joint infringement. According to Leader, it asserted joint infringement as an alternative theory of liability with respect to only the method claims (claims 9, 11, and 16) of the '761 patent. Because sufficient evidence supports the jury's verdict that Facebook directly infringed the method claims of the patent on its own accord, without regard to the actions of its end users or employees, Leader maintains that application of the joint infringement theory is not relevant to support the jury's verdict on the method claims. As for the system and computer-readable media claims (claims 1, 4, 7, 21, 23, 25, 31, and 32), Leader contends that it never advanced a joint theory of infringement, because that theory only applies to method claims. Leader maintains that the system and computer-readable media claims are product claims and, therefore, do not require user performance.

Accordingly, Leader contends that the jury's verdict that Facebook directly infringes the '761 patent should be upheld, and Facebook's Motion should be denied.

B. Legal Principles For Direct Infringement

“[D]irect infringement requires a single party to perform every step of a claimed method.” Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed.Cir.2010). Liability for direct infringement cannot be avoided by having someone else carry out one or more of the claimed steps. See BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378–79 (Fed.Cir.2007). Thus, liability for direct infringement may be established under a joint infringement theory. As the Federal Circuit has explained:

[W]here the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises “control or direction” over the entire process such that every step is attributable to the controlling party, i.e., the “mastermind.” ... At the other end of this multi-party spectrum, mere “arms-length cooperation” will not give rise to direct infringement by any party.

Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed.Cir.2008) (internal citations omitted).C. Whether Facebook Is Entitled To Judgment As A Matter Of Law Of No Direct Infringement

Reviewing the jury's verdict in the light most favorable to Leader, as the verdict winner, the Court concludes that sufficient evidence exists to support the jury's verdict that Facebook alone performed each and every element of the asserted method claims (claims 9, 11 and 16) for purposes of establishing direct infringement. In full, independent claim 9 recites:

A computer-implemented method of managing data, comprising computer-executable acts of:

creating data within a user environment of a web-based computing platform via user interaction...