Total Quality Sys. v. Universal Synaptics Corp.

1

TOTAL QUALITY SYSTEMS, INC, Plaintiff/Counterclaim Defendant, v. UNIVERSAL SYNAPTICS CORPORATION, Defendant/Counterclaim Plaintiff.

No. 1:22-cv-00167-RJS-DAO

United States District Court, D. Utah

May 23, 2024

Daphne A. Oberg, Magistrate Judge

MEMORANDUM DECISION AND ORDER GRANTING TQS'S PARTIAL MOTION TO DISMISS

ROBERT J. SHELBY CHIEF UNITED STATES DISTRICT JUDGE

This action arises from the deterioration of a business relationship between two Utah-based defense contractors Plaintiff/Counterclaim Defendant Total Quality Systems, Inc. (TQS) and Defendant/Counterclaim Plaintiff Universal Synaptics Corporation (Universal). Now before the court is TQS's Partial Motion to Dismiss Universal's Amended Counterclaim,^[1] seeking dismissal of three of Universal's eleven causes of action.^[2]

TQS moves to dismiss Universal's fourth and fifth causes of action for willful patent infringement on the grounds that (1) Universal's patents-in-suit are invalid under 35 U.S.C. § 101 and (2) the pleadings fail to sufficiently state claims for either infringement or willful infringement.^[3] TQS also moves to dismiss Universal's tenth cause of action for defamation either: (1) as time-barred under the statute of limitations or (2) for failure to adequately state a claim for relief.^[4] For the reasons explained below, TQS's Motion is GRANTED. The court dismisses without prejudice Universal's willful patent infringement and defamation claims.

BACKGROUND

I. Factual Background^[5]

Military aircraft can suffer from intermittent faults in their electrical systems, which are difficult to duplicate and isolate.^[6] Because technicians struggle to isolate the source of the faults, the U.S. military is often forced to conduct more extensive repairs or to replace entirely older electronic systems to ensure the aircrafts remain functional.^[7] In aggregate, these repairs can cost billions of dollars.^[8]

To solve this problem, in 1987 Brent and Paul Sorensen^[9] invented Intermittent Fault Detection (IFD) technology, which forms the basis of the Intermittent Fault Detection and Isolation System (IFDIS).^[10] This complex fault detection solution is used by the Air Force, Navy, and other customers to identify the sources of intermittent faults, avoiding the need to replace entire electronic systems.^[11] The IFDIS is comprised of five major components: (1) the IFD; (2) a “[s]hake table to simulate the flight environment;” (3) an “[e]nvironmental chamber to simulate the flight environment;” (4) the “Interface Test Adapter (ITA), a wiring harness that interconnects a Unit Under Test (UUT) to the IFD;” and (5) various other Universal trade secrets.^[12] Once a fault is detected in the UUT by the IFDIS, the precise faulty circuit is reported to the test technician, allowing for targeted repairs.^[13]

Brent and Paul founded Universal in 1996 as a vehicle to market and sell their IFD products.^[14] In 2006, Universal and TQS began working together to provide IFDIS services to customers.^[15] Universal developed the IFDIS while TQS “exclusively [provided] repair services for the IFDIS.”^[16] Their partnership continued for over a decade. The final contracts between the two were the 2017 Teaming Agreement and the Operative NDA.^[17] The Operative NDA was a one-way agreement, “governing] TQS's treatment of any confidential information or trade secrets that would be provided by Universal to TQS as part of the 2017 Teaming Agreement.”^[18]

While their relationship was still productive, Universal and TQS “jointly submitted an SBIR Phase II contract proposal to the U.S. Government to design and manufacture prototype IFDIS Test Program Sets for the Air Force and NAVAIR.”^[19] On December 17, 2018, Universal terminated the 2017 Teaming Agreement.^[20] As part of the termination, Universal provided TQS with a formal letter.^[21] This letter included a reminder about the Operative NDA which:

[P]revented TQS from accessing, using or sharing information relating to (a) the IFD and associated software without Universal's consent, (b) the licensed process of environmental stimulation to induce an intermittent fault as outlined in the 1998 and 2012 patents, except on those systems that were delivered under a SBIR contract vehicle, and (c) any previously licensed process technology on non-SBIR delivered IFD systems.^[22]

Universal communicated, “TQS was no longer authorized to provide the IFDIS ITA in connection with the SBIR [P]hase II contract proposal and demanded that TQS remove the IFDIS, NODES software, and Universal support from the statement of work.”^[23] Universal warned “any design and manufacturer of the IFDIS ITA, or any other development by TQS pursuant to this SBIR Phase II contract would constitute infringement of Universal's patent rights.”^[24] Nevertheless, Universal now alleges TQS did not withdraw these sections of the proposal and the government awarded TQS the contract.^[25]

Universal owns several patents related to the IFD and the IFDIS. In 1998, the United States Patent and Trademark Office (USPTO) awarded Brent U.S. Patent No. 5,744,967 (the '967 Patent), which he later assigned to Universal.^[26] “In 2009, Brent filed another patent application for improvements he made to the IFDIS,” and assigned his rights to Universal.^[27] The USPTO awarded U.S. Patent No. 8,103,475 (the '475 Patent) to Universal on January 24, 2012.^[28] In 2018, the Sorensens and two other partners filed a patent application “for further improvements that they made to the IFDIS” and assigned their rights to Universal.^[29] The USPTO awarded U.S. Patent No. 10,641,826 (the '826 Patent) to Universal on May 5, 2020.^[30]

In the course of performing the SBIR Phase II contract between December 4, 2019 and August 23, 2021, Universal alleges “TQS improperly used the patented technology claimed in the '475 Patent and the '826 Patent to design and manufacture prototype IFDIS Test Program Sets for the Air Force and NAVAIR.”^[31] “By using the Air Force IFDIS to test its prototype ITAs without authorization or license from Universal, and more specifically by using the IFD within the Air Force IFDIS,” TQS infringed at least Claims 1 and 8 of the '475 Patent and Claim 12 of the '826 Patent.^[32]

Claim 1 of the '475 Patent reads:

1. An apparatus for testing a system, the apparatus comprising:

a plurality of inputs each adapted to receive a signal from a test point in the system under testing;

a switching module including:

a first output selectively coupled to receive and output one or more of the plurality of inputs; and

a set of outputs excluding the first output and corresponding in number to the plurality of inputs, each of the outputs in the set of outputs being selectively coupled to receive and output a corresponding one of the plurality of inputs; a neural network coupled to the set of outputs of the switching module, the neural network configured to measure electrical characteristics of each of the test points of the system under test at the same time when the set of outputs is selectively coupled to output the plurality of inputs to the neural network; and

a test meter coupled to the first output of the switching module such that the test meter can measure electrical characteristics of the test points when the first output is selectively coupled to output the one or more of the plurality of inputs to the test meter;

wherein when the first output is selectively coupled to output the one or more of the plurality of inputs to the test meter, the switching module is configured to sequentially couple one or more combinations of test points of the system under test to the test meter such that electrical characteristics of a first test point of the combination of test points relative to one or more other test points of the combination of test points is determined.^[33]

Claim 8 of the '475 patent reads:

8. An apparatus for testing a system, the apparatus comprising:

at least one row sense line and at least one column sense line;

an array of nodes each receiving a signal from the system under test, wherein each node is electrically coupled to a specific test pin and a switch specific to the node, the nodal switch being electrically coupled to the specific test pin, each of the nodal switches being configured to selectively couple a signal that is alternative to the system under test signal received at the corresponding node to the at least one row sense line and the at least one column sense line;

a circuit coupled to the at least one row sense line and configured to detect the signal coupled to the row sense line; and

a circuit coupled to the at least one column sense line and configured to detect the signal coupled to the column sense line.^[34]

Claim 12 of the '826 patent reads:

12. A method of mapping interconnections between connection points in a unit under test (UUT), the method comprising:

accessing a test module comprising at least one UUT, the UUT comprising one or more connection points; instantiating a database table with one or more database table entries configured to list connections identified between the connection points, wherein the database table entries are configured to store a resistance level measured at each connection point;

provisioning a switch connected to each connection point to automatically detect interconnections on the UUT, the switches being configured to identify which connection points in the circuit board are electrically connected; and

storing an indication of the identified interconnections in the database table entries, such that the UUT's interconnections are mapped and stored in the database table.^[35]

II. Procedural History

TQS filed the present action in December 2022^[36] and Universal filed its Amended Counterclaim in August...