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Csb-System International Inc. v. Sap America

April 16, 2012

CSB-SYSTEM INTERNATIONAL INC. PLAINTIFF/COUNTERCLAIM DEFENDANT,
v.
SAP AMERICA, INC., DEFENDANT/COUNTERCLAIM PLAINTIFF.



The opinion of the court was delivered by: Ronald L. Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court is Plaintiff SAP America, Inc.'s ("SAP") Motion for Summary Judgment of Infringement and Defendant Motion CSB-System International, Inc.'s ("CSB") Cross-Motion for Partial Summary Judgment of Infringement. For the following reasons, Defendant's Motion is granted in part and denied in part, and Plaintiff's Motion is denied.

I. STATEMENT OF FACTS*fn1

A. The Patent

The patent involved in this case is U.S. Patent No. 5,631,953 ("the '953 Patent"), which claims a system or apparatus. (Def.'s Mot. Summ. J., Ex. 2 ("953 Patent"); Def.'s Statement of Undisputed Facts ("DSUF") ¶ 1; Pl.'s Responsive Statement of Undisputed Facts ("PRSUF") ¶ 1.) This Patent recites eight claims, claim 1 of which states as follows: A circuit arrangement for integration of EDP systems in utilization of telephone systems connected to a public ISDN or Euro ISDN telephone network, the circuit arrangement comprising a plurality of telephone extensions which are directly connectable to a telephone network selected from the group consisting of a public ISDN telephone network and Euro ISDN telephone network; a first line; an intelligent telephone system arranged so that said telephone extensions are connectable with said at least one telephone network through said first line and said intelligent telephone system; a plurality of personal computers; an integration element arranged between said intelligent telephone system and said personal computers, said integration element receiving signals via at least one connection element selected from the group consisting of an SDLC connection element and an ISDN connection element via a second line from said at least one telephone network via said intelligent telephone system and sending back signals to said at least one telephone network, said integration element also sending a data record assigned an appropriate information via a third line, via a LAN connected to a LAN server by a fourth line and via a fifth line to said personal computers again; a computing system; and a software layer arranged so that conversion of the signals into a data record and vice versa is carried by said integration element, by said computing system by said software layer and by said at least one connection element with an internal software.

('953 Patent, col. 5, line 52--col. 6, line 12.) Via order issued on July 28, 2011, the Court construed the claim term "[t]telephone extensions which are directly connectable to a telephone network selected from the group consisting of a public ISDN telephone network and Euro ISDN telephone network" to mean "telephones and/or other devices such as fax devices of the type that can be connected to either the public ISDN or Euro ISDN telephone network." (Order, July 28, 2011, Docket No. 65.) In addition, the Court accepted the parties' agreed-upon definition of "ISDN" as being an "integrated services digital network." (Id.)

In the simplest of terms, the technology in this case concerns circuit arrangements of hardware and software that allow the integration of speech (telephone systems) with data systems. These systems permit agents in customer service call centers to obtain information from their personal computer about the person calling for assistance at the same time he or she takes the call. As explained by the parties' experts at the Markman hearing, when a person calls a customer service center, the technology inputs the caller's telephone number into a computer system which converts it into a computer-readable request. The server then processes the request, obtains information about the customer calling, and creates a "screen pop," wherein the various information about that particular customer will automatically appear on the screen of the agent's personal computer at the same time the agent answers the call. (N.T. June 7, 2011, 18:21--24:25, 59:12--63:24.) The agent may then use his or her personal computer to make requests from a centrally shared server-which stores all the data about the clients-to obtain additional information, transfer the customer to another agent, or conference in another agent. (Id. at 26:5--28:8, 58:9--59:10.) Both parties have agreed that the technology runs on what is called a client/server architecture, wherein the agent's personal computer (the client) runs the customer service application and the database server (the server) answers requests from the client to get data. (Id. at 24:14--20.) This is distinct from the host/terminal architecture, wherein the host runs and controls the application and holds all the data, and the agent's terminal is simply an input and output device. (Id. at 21:8--23:12.)*fn2

The U.S. application which led to the '953 patent was filed on August 25, 1995. The United States Patent & Trademark Office ("USPTO") allowed the claims as set forth in the '953 Patent. Ultimately the '953 patent issued on May 20, 1997.

B. The Accused Product

The accused products are the SAPphone interface and the Integrated Communication Interface ("ICI") (collectively the "Accused Products"). The SAPphone interface was SAP's first software product that had the capability to integrate an EDP system with the telephony system. (Def.'s Mot. Summ. J., Ex. 3, Expert Report of Mark Gaynor ("Gaynor Report") ¶ 73.) In the context of a customer call center, the Accused Products run on application servers that, among other functions, coordinate the flow of data between the telephony server and the agent's workstation. (Def.'s Mot. Summ. J., Ex. 8.) According to CSB's expert, Dr. Mark Gaynor, the alleged direct infringement occurs at customer installations, when "[SAP] customers . . . have made CTI circuit arrangement that [1] includes the SAPphone interface that allows the integration . . . or [2] includes ICI and which are covered by the claims of the '953 patent." (Gaynor Report ¶¶ 108, 112.) More precisely stated, Plaintiff's allegation is that "[t]he SAPphone interface and the ICI interface cause the infringement because it makes a separated EDP and telephony system into the infringing computer integrated telephone circuit arrangement covered by the claims of the '953 patent." (Id. ¶ 2.)

Each of the customers referenced by Dr. Gaynor who have set up such installations of the SAPphone and ICI interfaces uses a "voice over internet protocol" or "VoIP" telephone extension.*fn3 (PRSUF ¶ 9; Def.'s Mot. Summ. J., Ex. 4, Dep. of Michael Petrosh ("Petrosh Dep."), 107:4--108:3, 108:17--109:4, 116:22--117:12, 120:7--18, 121:10--16, 123:7--124:17, Aug. 10, 2011; Def.'s Mot. Summ. J., Ex. 6, Dep. of Carol Wirth ("Wirth Dep.") 15:3--21:3, 67:9--12, July 13, 2011; Def.'s Mot. Summ. J., Ex. 7, Dep. of Anthony Xeno Yuliano ("Yuliano Dep."), 65:2--67:19, July 18, 2011.) A VoIP phone is not a conventional telephone, but rather a type of "soft phone" in which the agent communicates via a headset connected to a soundcard through software on the agent's workstation computer. (Pl.'s Resp. Opp'n. Mot. Summ. J., Ex. 10, Expert Report of Suresh Gursahaney ("Gursahaney Report") 12.) VoIP phones were not in prevalent use at the time of the '953 patent and, thus, are after-arising technology. (Pl.'s Opp'n Summ. J. Ex. 9, Dep. of Suresh Gursahaney ("Gursahaney Dep."), 55:19-56:5, Dec. 1, 2011; Pl's Opp'n Summ. J., Ex. 6 at 7.) VoIP phones are not directly connected to the telephone switch, as they operate over the Local Area Network ("LAN"), and, unlike traditional digital extensions, VoIP phones convert voice into discrete, internet-compatible data packets, allowing the data to be dissected, distributed, replicated, and reintegrated. (Gursahaney Report 12.)

C. Procedural History

Plaintiff CSB-System International, Inc. brought the present patent action against Defendant SAP America, Inc. in this Court on May 11, 2010, alleging that the Accused Products infringe on the '953 Patent held by Plaintiff. The parties submitted extensive briefing on several disputed claim terms and proceeded to a one-day Markman hearing*fn4 on June 7, 2011, at which time each side offered a short tutorial and the testimony of an expert witness. Thereafter, on July 27, 2011, the Court issued a lengthy opinion construing each of the disputed claims, but declining to rule on SAP's claims of indefiniteness until the summary judgment stage.

Presently before the Court are Defendant's Motion for Summary Judgment of Non-Infringement and Plaintiff's Cross-Motion for Summary Judgment of Infringement. Briefing on these Motions was completed on March 2, 2012, making them ripe for consideration.

II. STANDARD OF REVIEW ON SUMMARY JUDGMENT

Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be "genuine," a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145--46 (3d Cir. 2004). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermkts., Inc. v. Darling-Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993)). Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence presented by both sides, the court must accept as true the allegations of the non-moving party, and "all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.

Although the moving party must establish an absence of a genuine issue of material fact, it need not "support its motion with affidavits or other similar materials negating the opponent's claim." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by "pointing out . . . that there is an absence of evidence to support the nonmoving party's claims." Id. at 325. Once the movant has carried its initial burden, the opposing party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec., 475 U.S. at 586. "[T]he non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument." Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006). If the non-moving party "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 at trial," summary judgment is appropriate. Celotex, 477 U.S. at 322. Moreover, the mere existence of some evidence in support of the non-movant will not be adequate to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson, 477 U.S. at 249--50.

III. DISCUSSION

The first step in a patent infringement analysis is to define the meaning and scope of the claims of the patent. Markman, 52 F.3d at 976. Claim construction, which serves this purpose, is a matter of law exclusively for the court. Id. at 979. The focus of a court's analysis must begin and remain on the language of the claims, "for it is that language that the patentee chose to use to 'particularly point[ ] out and distinctly claim[ ] the subject matter which the patentee regards as his invention.'" Interactive Gift Express, Inc. v. Compuserve, Inc., 256 F.3d 1323, 1331 (Fed. Cir. 2001) (quoting 35 U.S.C. § 112, ¶ 2).

Once the meaning and scope of the claims is established,the court must make a determination of "whether the properly construed claims encompass the accused device." Zelinski v. Brunswick Corp., 185 F.3d 1311, 1315 (Fed. Cir. 1999); see also Markman, 52 F.3d at 976. "In order for a court to find infringement, the plaintiff must show the presence of every . . . [limitation] or its substantial equivalent in the accused device." Wolverine World Wide, Inc. v. Nike, Inc., 38 F.3d 1192, 1199 (Fed. Cir. 1994) (quoting Perkin Elmer Corp. v. Westinghouse Elec. Corp., 822 F.2d 1528, 1532--33 (Fed. Cir. 1987)). Infringement of a patent claim may occur in one of two ways. Literal infringement exists when each limitation contained within a particular patent claim is present in an accused product. Abraxis Bioscience, Inc. v. Mayne Pharma (USA) Inc., 467 F.3d 1370, 1378--79 (Fed. Cir. 2006); Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1310 (Fed. Cir. 2005). Where no literal infringement can be found, liability may attach pursuant to the doctrine of equivalents. Under this doctrine, an accused product that does not meet every element of a particular claim may nonetheless be deemed its equivalent because the differences between the two are insubstantial from the standpoint of one of ordinary skill in the art. Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 39--40 (1997); Abraxis Bioscience, 467 F.3d at 1379. It is well-settled, however, that because the doctrine of equivalents deals with subject matter beyond the literal scope of the claim, the doctrine cannot be applied too broadly without "undermin[ing] the public's reliance on the patent's claim language and creat[ing] a situation in which '[c]ompetitors will never know whether their actions infringe a granted patent.'" Novartis Pharms. Corp. v. Abbott Labs., 294 F. Supp. 2d 557, 563 (D. Del. 2003) (quoting London v. Carson Pirie Scott & Co., 946 F.2d 1534, 1538 (Fed. Cir. 1991)). Mindful of this potential problem, the United States Court of Appeals for the Federal Circuit has warned that application of the doctrine of equivalents should be "the exception . . . [and] not the rule" in patent infringement actions. London, 946 F.2d at 1538.

Ultimately, direct infringement, whether literal or through the doctrine of equivalents, must be proven by the patentee by a preponderance of the evidence. Cross Med. Prods., 424 F.3d at 1310. When a survey of the record before the court discloses the lack of any genuinely disputed issues of material fact, summary judgment in favor of the defendant on the issue of infringement is appropriate. PC Connector Solutions LLC v. SmartDisk Corp., 406 F.3d 1359, 1364 (Fed. Cir. 2005). As emphasized by the Federal Circuit, however, "[i]nfringement under the doctrine of equivalents requires an intensely factual inquiry." Vehicular Techs. Corp. v. Titan Wheel Int'l Inc., 212 F.3d 1377, 1381 (Fed. Cir. 2000); Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 1251 (Fed. Cir. 2000); Novartis Pharms., 294 F. Supp. 2d at 563. Thus, the summary judgment standard, in the context of a doctrine of equivalents analysis is "lofty," Overhead Door Corp. v. Chamberlain Grp., Inc., 194 F.3d 1261, 1269 (Fed. Cir. 1999), and "a summary conclusion that a reasonable jury could not find infringement is often illusive." Leggett & Platt, Inc. v. Hickory Springs Mfg. Co., 285 F.3d 1353, 1360 (Fed. Cir. 2002).

In the present case, the sole limitation at issue is the claim 1 limitation reading, "the circuit arrangement comprising a plurality of telephone extensions which are directly connectable to a telephone network selected from the group consisting of a public ISDN telephone network and Euro ISDN telephone network." ('953 Patent, col. 5, lines 54--58.) As noted above, in the Markman Order, the Court construed this phrase to mean "telephones and/or other devices such as fax devices of the type that can be directly connected to either the public ISDN or Euro ISDN telephone network." (Order, July 28, 2011, Docket No. 65.) The Accused Products, unlike the '953 Patent, do not use ISDN phones as part of a CTI arrangement; rather they use VoIP phones or "software" phones in which the agent communicates via a headset connected to a soundcard on the agent's workstation computer. (DSUF ¶ 9; Petrosh Dep. 107:18--108:10.) Because such VoIP phones cannot directly connect to a public or Euro ISDN network, Defendant asserts that Plaintiff's infringement cause of action fails under both a literal infringement theory and a doctrine of equivalents theory. The Court considers each theory of infringement individually.

A. Literal Infringement

Defendant's first argument asserts that VoIP phones do not literally satisfy the "directly connectable to . . . a public ISDN telephone network" claim limitation. "Literal infringement requires the patentee to prove that the accused device contains each limitation of the asserted claim(s)." Bayer AG, 212 F.3d at 1247 (citingMas-Hamilton Grp. v. LaGard, Inc., 156 F.3d 1206, 1211 (Fed. Cir. 1998)). "If any claim limitation is absent from the accused device, there is no literal infringement as a matter of law." Id. "Summary judgment of no literal infringement is proper when, construing the facts in a manner most favorable to the non-movant, no reasonable jury could find that the accused system meets every limitation recited in the properly construed claims." Catalina Mkting Int'l, Inc. v. Coolsavings.com, Inc., 289 F.3d 801, 812 (Fed. Cir. 2002).

According to Defendant in this case, the '953 Patent requires that the telephone extensions/phones identified in claim 1 use ISDN-based protocols to communicate over, and with, other devices on the ISDN network without using any other intermediary device. As explained by Plaintiff's expert, Mark Gaynor:

Q. Now, you say that: "Those of ordinary skill in the art would understand this term means 'telephones and/or other devices such as fax devices which can connect to a telephone network without any intermediary ...


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