SRI Int'l, Inc. v. Cisco Sys., Inc.

179 F.Supp.3d 339

SRI International, Inc., Plaintiff,

v.Cisco Systems, Inc., Defendant.

Civ. No. 13–1534–SLR

United States District Court, D. Delaware.

Signed April 11, 2016

Thomas L. Halkowski, Esquire of Fish & Richardson P.C., Wilmington, Delaware. Of Counsel: Frank Scherkenbach, Esquire, David Kuznick, Esquire, Howard G. Pollack, Esquire, Mike Sobolev, Esquire, David M. Hoffman, Esquire, David S. Morris, Esquire, Philip W. Goter, Esquire, and Joanna M. Fuller, Esquire of Fish & Richardson P.C. Counsel for Plaintiff.

Jack B. Blumenfeld, Esquire and Michael J. Flynn, Esquire of Morris, Nichols, Arsht & Tunnell L.L.P., Wilmington, Delaware. Of Counsel: Steven Cherny, Equire, Michael W. De Vries, P.C, Esquire, Adam R. Alper, P.C., Esquire, and Jason M. Wilcox, Esquire of Kirkland & Ellis, L.L.P. Counsel for Defendant.

MEMORANDUM OPINION

ROBINSON, District Judge

I. INTRODUCTION

Plaintiff SRI International, Inc. (“SRI”) filed suit against defendant Cisco Systems Inc. (“Cisco”), alleging infringement of U.S. Patent No. 6,711,615 (“the '615 patent”) and 6,484,203 (“the '203 patent”) (collectively, “the patents”) on September 4, 2013. (D.I. 1) On December 18, 2013, Cisco answered the complaint and counterclaimed for noninfringement and invalidity. (D.I. 9) SRI answered the counterclaims on January 13, 2014. (D.I. 11) The court issued a claim construction order on May 14, 2015. (D.I. 138) Trial is scheduled to commence on May 2, 2016. (D.I. 40)

Presently before the court are Cisco's motion for summary judgment of invalidity under 35 U.S.C. § 101 (D.I. 158); Cisco's motion for summary judgment of invalidity under 35 U.S.C. § 102(b) and § 103 (D.I. 182);¹ Cisco's motion barring SRI from recovery of pre-suit damages based on the equitable doctrine of laches (D.I. 182); Cisco's motion for summary judgment for non-infringement (D.I. 182); Cisco's motion to exclude certain opinions of Dr. Prowse regarding SRI's lump settlement agreements (D.I. 213); Cisco's motion to exclude the testimony of Dr. Lee regarding apportionment (D.I. 216); and SRI's motion for summary judgment that Netranger and Hunteman are not prior art (D.I. 219). The court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a).

II. BACKGROUND

A. The Parties

SRI is an independent, not-for-profit research institute incorporated under the laws of the State of California, with its principal place of business in Menlo Park, California. (D.I. 1 at ¶ 1) SRI conducts client-supported research and development for government agencies, commercial businesses, foundations, and other organizations. (Id. at ¶ 6) Among its many areas of research, SRI has engaged in research related to computer security and, more specifically, to large computer network intrusion detection systems and methods. (Id. )

Cisco is a corporation organized and existing under the laws of the State of California, with its principal place of business in San Jose, California. (Id. at ¶ 2) Cisco provides various intrusion prevention and intrusion detection products and services. (Id. at ¶ 14)

B. Patents

The '615 patent (titled “Network Surveillance”) is a continuation of the '203 patent (titled “Hierarchical Event Monitoring and Analysis”), and the patents share a common specification and priority date of November 9, 1998.² (D.I 179 at 1) SRI has asserted infringement of claims 1–4, 14–16, and 18 of the '615 patent and claims 1–4, 12–15, and 17 of the '203 patent.³ (Id. at 3) The patents relate to the monitoring and surveillance of computer networks for intrusion detection. In particular, the patents teach a computer-automated method of hierarchical event monitoring and analysis within an enterprise network that allows for real-time detection of intruders. Upon detecting any suspicious activity, the network monitors generate reports of such activity. The claims of the '203 and '615 patents focus on methods and systems for deploying a hierarchy of network monitors that can generate and receive reports of suspicious network activity. Independent claims 1 and 13 of the '615 patent read as follows:

1. A computer-automated method of hierarchical event monitoring and analysis within an enterprise network comprising:

deploying a plurality of network monitors in the enterprise network;

detecting, by the network monitors, suspicious network activity based on analysis of network traffic data selected from one or more of the following categories: {network packet data transfer commands, network packet data transfer errors, network packet data volume, network connection requests, network connection denials, error codes included in a network packet, network connection acknowledgements, and network packets indicative of well-known network-service protocols};

generating, by the monitors, reports of said suspicious activity; and

automatically receiving and integrating the reports of suspicious activity, by one or more hierarchical monitors.

(15:1–21)

13. An enterprise network monitoring system comprising:

a plurality of network monitors deployed within an enterprise network, said plurality of network monitors detecting suspicious network activity based on analysis of network traffic data selected from one or more of the following categories: § network packet data transfer commands, network packet data transfer errors, network packet data volume, network connection requests, network connection denials, error codes included in a network packet, network connection acknowledgements, and network packets indicative of well-known network-service protocolsŒ;

said network monitors generating reports of said suspicious activity; and one or more hierarchical monitors in the enterprise network, the hierarchical monitors adapted to automatically receive and integrate the reports of suspicious activity.

(15:56–16:6)

III. STANDARD OF REVIEW

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A party asserting that a fact cannot be—or, alternatively, is—genuinely disputed must be supported either by citing to “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motions only), admissions, interrogatory answers, or other materials,” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (internal quotation marks omitted). The Court will “draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

To defeat a motion for summary judgment, the non-moving party must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586–87, 106 S.Ct. 1348 ; see also Podo b nik v. U.S. Postal Service, 409 F.3d 584, 594 (3d Cir.2005) (stating party opposing summary judgment “must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue”) (internal quotation marks omitted). Although the “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment,” a factual dispute is genuine where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.”Id. at 249–50, 106 S.Ct. 2505 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (stating entry of summary judgment is mandated “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial”).

IV. INVALIDITY

A. 35 U.S.C. § 101

1. Standard

Section 101 provides that patentable subject matter extends to four broad categories, including: “new and useful process[es], machine[s], manufacture, or composition[s] of matter.” 35 U.S.C. § 101 ; see also Bilski v. Kappos, 561 U.S. 593, 601, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) (“Bilski II ”); Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). A “process” is statutorily defined as a “process, art or method, and includes a new use of a known process, machine manufacture, composition of matter, or material.” 35 U.S.C. § 100(b). The Supreme Court has explained:

A process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. If new and useful, it is just as patentable as is a piece of machinery. In the language of the patent law, it is an art. The machinery pointed out as suitable to perform the process may or may not be new or patentable; whilst the process itself may be altogether new, and produce an entirely new result. The process requires that certain things should be done with certain substances, and in a certain order; but the tools to be used in doing this may be of

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