Soverain Software LLC v. Newegg Inc.

836 F.Supp.2d 462

SOVERAIN SOFTWARE LLC, Plaintiff,

v.NEWEGG INC., Defendant.

Case No. 6:07 CV 511.

United States District Court,

E.D. Texas,

Tyler Division.

Aug. 11, 2010.

Amanda Aline Abraham, Carl R. Roth, The Roth Law Firm, Brendan Clay Roth, Law Office of Carl R. Roth, Michael Charles Smith, Siebman Burg Phillips & Smith, LLP, Marshall, TX, for Plaintiff.

Eric Hugh Findlay, Findlay Craft, Herbert A. Yarbrough, III, Attorney at Law, Tyler, TX, Charles Edward Juister, Julianne Hartzell, Matthew C. Nielsen, Scott A. Sanderson, Thomas L. Duston, Marshall Gerstein & Borun, Chicago, IL, Claudia Wilson Frost, DLA Piper USA LLP, Jeremy Jason Gaston, Burford & Maney, PC, Houston, TX, Daniel H. Brean, David C. Hanson, John W. McIlvaine, III, Kent E. Baldauf, Jr., The Webb Law Firm, Pittsburgh, PA, Mark Daniel Strachan, Richard Alan Sayles, Sayles Webner, Dallas, TX, Mira S. Wolff, Newegg Inc., City of Industry, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

LEONARD DAVIS, District Judge.

Before the Court are Soverain's Renewed Motion for Judgment as a Matter of Law (“JMOL”) of Infringement of the '314, '492, and '639 Patents and Motion for New Trial (“MNT”) on '639 Patent Damages (Docket No. 402); Soverain's Motion for Permanent Injunction or, in the Alternative, Ongoing Royalties (Docket No. 403); Soverain's Motion for Pre-judgment Interest and Costs, Post–Verdict Damages to Judgment, and Post–Judgment Interest (Docket No. 404); Newegg's Renewed Motion for JMOL on Damages and Alternative MNT or Remittitur (Docket No. 406); Newegg's Renewed Motions for JMOL of Non–Infringement and Invalidity of the Asserted Claims and Alternative MNT (Docket No. 407); and Newegg's Opposed Motion to Strike Certain Evidence Submitted in Support of Soverain's Post–Trial Motions (Docket No. 411). For the reasons stated below, the Court GRANTS in part Soverain's motion for JMOL on infringement and MNT on damages (Docket No. 402), GRANTS in part Soverain's motion for permanent injunction or, in the alternative, ongoing royalties (Docket No. 403), GRANTS in part Soverain's motion for prejudgment interest, post-verdict damages, and post-judgment interest (Docket No. 404), and DENIES all other motions.

BACKGROUND

Plaintiff Soverain Software LLC (“Soverain”) filed suit against Newegg Inc. (“Newegg”) and several other defendants in November 2007. Newegg is the only remaining defendant. Soverain asserts U.S. Patent Nos. 5,715,314 (the “'314 patent”), 5,909,492 (the “'492 patent”), and 7,272,639 (the “'639 patent”) (collectively, “the patents-in-suit”) against Newegg. The '314 and ' 492 patents, both entitled “Network Sales System,” are directed to a network-based sales system including at least one buyer computer, at least one merchant computer, and at least one payment computer, all interconnected by a computer network. The asserted claims in the '314 and '492 patents are system claims. The '639 patent, entitled “Internet Server Access Control and Monitoring Systems,” is directed to methods for controlling and monitoring access to network servers. The asserted claims of the '639 patent are method claims.

A jury trial began on April 26, 2010. At trial, Soverain argued that Newegg used technology for its websites that infringed claims 35 and 51 of the '314 patent; claims 17, 41, and 61 of the '492 patent; and claims 60 and 79 of the '639 patent. Newegg argued that it did not infringe Soverain's patents and that Soverain's patents were invalid. Following a five day trial, the Court submitted the following issues to the jury: (1) direct infringement and active inducement of infringement of the '314 and '492 patents, (2) direct infringement of the '639 patent, (3) invalidity of the patents-in-suitt based on anticipation, and (4) damages. The jury returned a verdict finding the patents-in-suit not invalid, the '314 and '492 patents infringed, and awarding Soverain $2,500,000 in damages. Specifically, the jury found Newegg liable for induced infringement of claims 35 and 51 of the '314 patent and claims 17, 41, and 61 of the '314 patent, but found that Newegg did not directly infringe any of the asserted claims of the patents-in-suit.

MOTIONS FOR JMOL & NEW TRIAL

JMOL Standard

“The grant or denial of a motion for judgment as a matter of law is a procedural issue not unique to patent law, reviewed under the law of the regional circuit in which the appeal from the district court would usually lie.” Summit Tech. Inc. v. Nidek Co., 363 F.3d 1219, 1223 (Fed.Cir.2004). In the Fifth Circuit, JMOL may not be granted unless “there is no legally sufficient evidentiary basis for a reasonable jury to find as the jury did.” Hiltgen v. Sumrall, 47 F.3d 695, 700 (5th Cir.1995) (internal quotation marks omitted). A court reviews all the evidence in the record and must draw all reasonable inferences in favor of the nonmoving party, however, a court may not make credibility determinations or weigh the evidence, as those are solely functions of the jury. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

New Trial Standard

Under Rule 59(a) of the Federal Rules of Civil Procedure, a new trial can be granted to any party to a jury trial on any or all issues “for any reason for which a new trial has heretofore been granted in an action at law in federal court.” “A new trial may be granted, for example, if the district court finds the verdict is against the weight of the evidence, the damages awarded are excessive, the trial was unfair, or prejudicial error was committed in its course.” Smith v. Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir.1985).

INFRINGEMENT

NEWEGG'S MOTION FOR JMOL & MNT—NO INDIRECT INFRINGEMENT OF '314 AND '492 PATENTS

Newegg moves for JMOL, or alternatively for a new trial, on the issue of no indirect infringement of claims 35 and 51 of the '314 patent, claim 17 of the '492 patent, and claims 41 and 61 of the '492 patent. Claims 35 and 51 of the '314 patent and claim and claim 17 of the '492 patent are referred to as the “shopping cart claims.” Claims 41 and 61 of the '492 patent, are referred to as the “hypertext statement claims.”

Shopping Cart Claims

Newegg first argues that there was no legally sufficient evidence from which a reasonable jury could conclude that the accused Newegg system meets all the limitations of independent claim 34 of the '314 patent¹ or independent claim 17 of the ' 492 patent (“shopping cart claims”), either literally or under the doctrine of equivalents.

In Newegg's accused system, when a customer adds an item to a shopping cart, product information concerning that item is held in a cookie on the customer's computer. Once the customer hits checkout, the contents of the cookie are transferred all at once to a shopping cart database. The issue is whether this transfer in the accused system satisfies two specific limitations in the shopping cart claims: (1) the “modification limitations” and (2) the “plurality limitations.”

Claim 34 of the '314 patent requires “said shopping cart computer [to be] a computer that modifies said stored representations of collections of products in said database,” and also requires the shopping cart computer be programmed “to modify the shopping cart in the shopping cart database to reflect the plurality of requests to add the plurality of products to the shopping cart.” '314 patent, col. 14:12–15, 26–28. Claim 17 of the '492 patent similarly requires “the shopping cart computer [to be] a computer that modifies the stored representations of collections of products in the database,” and that the shopping cart computer be programmed “to modify the shopping cart in the shopping cart database to reflect the plurality of requests to add the plurality of products to the shopping cart.” '492 patent, col. 14:64–67; col. 15:13–15. These are referred to as the “modification limitations.”

Newegg contends that its system cannot satisfy the modification limitations because there is no modification of the shopping cart database, let alone a modification of the shopping cart in the shopping cart database. Soverain contends that there is a modification of a shopping cart in the shopping cart database because an instance of a shopping cart in the database is changed. The Court construed the phrase “to modif[y] [the shopping cart in the shopping cart database]” to mean “to change [an instance of a shopping cart in a shopping cart database].” Docket No. 359–1, at 1. Soverain's technical expert, Dr. Grimes, basing his opinion on the Court's claim construction and other evidence presented at trial, testified that Newegg's system uses a two step process. First, when the customer clicks the check out button, a shopping cart ID is generated, which creates a holding space in the shopping cart database. Soverain contends this step creates an instance of a shopping cart in the shopping cart database. Next, the contents of the customer's shopping cart are moved to the shopping cart database in association with the shopping cart ID. Soverain contends this step represents the required modification. Dr. Grimes further testified that modifying the shopping cart to add all the products at once upon checkout is sufficient to satisfy the modification limitations.

Newegg argues that Soverain's logic is flawed because the shopping cart ID and the shopping cart are inserted into the database at the same time, and this “single instantiation” cannot be a modification of the shopping cart. Newegg also argues that a shopping cart ID cannot be a shopping cart under the Court's construction. Soverain does not allege that the shopping cart ID is a shopping cart, just that once the shopping cart ID is created, “an instance of a shopping cart” exists in the database. Once the customer's selected products are inserted into the shopping cart in the shopping cart database, that “instance of a shopping cart” is modified. Both Newegg and Soverain presented their...