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e-LYNXX Corp. v. InnerWorkings, Inc.

United States District Court, M.D. Pennsylvania

July 25, 2013

e-LYNXX CORPORATION, Plaintiff,
v.
INNERWORKINGS, INC., RENT-A-CENTER, INC., DR. PEPPER SNAPPLE GROUP, INC., R.R. DONNELLEY & SONS CO., NEWLINENOOSH, INC., THE STANDARD REGISTER CO., AND CIRQIT.COM, INC., Defendants

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[Copyrighted Material Omitted]

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For e-LYNXX Corporation, Plaintiff: Brett M. Pinkus, PRO HAC VICE, Jonathan T. Suder, Todd I. Blumenfeld, Friedman, Suder & Cooke, Fort Worth, TX; Darren P. Nicholson, PRO HAC VICE, Mark D. Strachan., PRO HAC VICE, Sayles Werbner PC, Dallas, TX; Scott Thomas Wyland, Salzmann Hughes, P.C., Carlisle, PA.

For InnerWorkings, Inc., Rent-A-Center, Inc., Defendants, Counterclaim Plaintiffs: Amanda J. Lavis, Robert J. Tribeck, Rhoads & Sinon LLP, Harrisburg, PA; J. Scott Andrews, Jennifer H. Doan, Joshua R. Thane, Haltom & Doan, Texarkana, TX.

For Dr. Pepper Snapple Group, Inc., Defendant, Counterclaim Plaintiff: Amanda J. Lavis, Robert J. Tribeck, Rhoads & Sinon LLP, Harrisburg, PA; Donald E. Burton, Faruki Ireland & Cox P.L.L., Dayton, OH.

For R.R. Donnelley & Sons Company, Defendant, Counterclaim Plaintiff: Bridget E. Montgomery, Eckert Seamans Cherin & Mellott, LLC, Harrisburg, PA; Daniel S. Stringfield, James R. Nuttall, McAndrews, Held & Malloy, Ltd., Chicago, IL.

For NewlineNoosh, Inc., Defendant, Counterclaim Plaintiff: Amanda J. Lavis, Robert J. Tribeck, Rhoads & Sinon LLP, Harrisburg, PA; Donald E. Burton, Ronald I. Raether, Jr., Faruki Ireland & Cox P.L.L., Dayton, OH.

For The Standard Register Company, Defendant: Anthony F. Bonner, PRO HAC VICE, John D. Luken, Dinsmore & Shohl LLP, Cincinnati, OH; Martin J. Cerullo, CERULLO, DATTE & WALLBILLICH, P.C., Pottsville, PA; Mary Ann Poirier, Dinsmore, Dayton, OH; Paul J. Datte, Cerullo, Datte & Wallbillich, Pottsville, PA.

For Cirqit.Com, Inc., Defendant, Counterclaim Plaintiff: Jennifer E. Hoekel, Richard L. Brophy, Armstrong Teasdale LLP, St. Louis, MO; Kathryn L. Simpson, Mette, Evans & Woodside, Harrisburg, PA.

For e-LYNXX Corporation, Counterclaim Defendant: Brett M. Pinkus, Jonathan T. Suder, Friedman, Suder & Cooke, Fort Worth, TX; Darren P. Nicholson, Mark D. Strachan, Sayles Werbner PC, Dallas, TX; Scott Thomas Wyland, Salzmann Hughes, P.C., Carlisle, PA.

For Taylor Corporation, Staples, Inc., Counterclaim Plaintiffs: Andrea C. Yang, Jan M Conlin, Tara D. Falsani, Thomas C. Mahlum, Robins, Kaplan, Miller & Ciresi LLP, Minneapolis, MN; Joseph U. Metz, Dilworth Paxson LLP, Harrisburg, PA.

OPINION

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MEMORANDUM

CHRISTOPHER C. CONNER, United States District Judge.

Presently before the court in the above-captioned matter are two motions for summary judgment on the grounds of non-infringement (Docs. 232, 235), filed by defendants Cirqit.com, Inc., and InnerWorkings, Inc., respectively. Also before the court is the motion for leave to file an amended answer (Doc. 252), filed jointly by defendants, and plaintiff e-LYNXX Corporation's motion to strike Cirqit's summary judgment evidence (Doc. 259). The motions have been fully briefed and are ripe for disposition. For the reasons to be discussed, the court will deny e-LYNXX's motion to strike and defendants' motion to amend, and grant InnerWorkings' and Cirqit's motions for summary judgment.

I. Procedural History

e-LYNXX originally filed this action in the United States District Court for the Eastern District of Texas, in August 2010. e-LYNXX voluntarily dismissed that case, refiling in this district on December 14, 2010. (See Doc. 1). The parties filed their Joint Case Management Plan (Doc. 7) on March 22, 2011, setting the deadline for amending pleadings as May 1, 2012. Trial in this matter is currently scheduled for November 2013.

In August and September, 2011, the parties filed briefs regarding their respective claim constructions, and defendants moved for summary judgment on grounds of patent invalidity. On October 11 and 12, 2011, the court heard oral argument on summary judgment and held a claim construction hearing, pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). The court issued a memorandum and order denying the motion for summary judgment and construing the disputed claim terms on September 27, 2012. While those motions were pending, e-LYNXX moved for leave to file a second amended complaint, in order to assert claims of infringement of a newly issued patent, number 8,209,227 (" the '227 patent" ). In their joint brief in opposition to e-LYNXX's motion, defendants argued that prejudice would result from amendment because they had engaged in " significant discovery," including document production, written discovery, and the issuance of subpoenas to third parties regarding prior art. (Doc. 204 at 6). The court denied the motion to amend on October 31, 2012, concluding that amendment would " delay resolution of this matter, whether by trial or dispositive motion,

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at least several months." (Doc. 214 at 6). On February 1, 2013, the parties submitted a joint motion to extend the deadline for filing dispositive motions to February 18, 2013, which the court granted. Cirqit and InnerWorkings separately moved for summary judgment on February 19, 2013, but did not file their joint motion for leave to amend until March 18, 2013.

II. The Invention and Claims

e-LYNXX alleges that Cirqit and InnerWorkings infringed U.S. Patent No. 7,451,106 (the " '106 patent" ) and U.S. Patent No. 7,788,143 (the " '143 patent" ). Both patents cover procurement systems for competitive bidding on customized goods and services. They share the same specification, which describes the invention as " [a]n apparatus and method for selecting a lowest bidding vendor from a plurality of vendors of a customized good or service." '106 patent, abstract; '143 patent, abstract. The invention seeks to streamline the process for procuring customized goods or services by reducing the search costs for buyers. As described in the specification, the prior art in this area generally limited buyers to soliciting bids from a small number of vendors, awarding the contract to the lowest bidder or to a bidder with whom the buyer had a previous relationship, and could therefore trust to produce high quality work. See '106 patent, col. 2, ll. 4-11. Buyers could attempt to " shop" the lowest bid to other vendors in an effort to secure a better deal, but to do so was both expensive and time consuming, and prevented buyers from securing the benefits of competition between many bidders.

Nor were suppliers without their inefficiencies. Manufacturers in industries with substantial overhead and labor costs, such as printing and information product suppliers, see id. col. 2, ll. 35-50, must balance their need to maintain a steady production schedule with the need to be available on short-notice to handle rush orders from regular customers. Manufacturers do not want to allow their machinery to sit idle for too long, cutting into their profit margins. Accordingly, they build into their production schedules a certain amount of slack time in the event that a customer places an unexpected rush order. Id. But if an expected order is cancelled, a manufacturer may be left with both an unscheduled lapse in its regular production schedule, and planned downtime that it has yet to fill with a rush order. Vendors seek to fill these unexpected holes in their production schedules with short-turnaround orders, which they secure by undercutting competitive bids. Id. col. 2, ll. 50-56. This process is referred to as " contribution pricing," because the price is below the manufacturer's normal profit margin level, but it nevertheless " contributes" to the bottom line more so than would idle machinery and labor.

In the instant matter, e-LYNXX accuses defendants of infringing claims 13-16 and 18 of the '106 patent, and claims 1 and 2 of the '143 patent. Claim 13 of the '106 patent states the following:

A system for facilitating a buyer's selection of a vendor via automated comparison of records and based upon bidding by vendors of customized goods or services via a computer operated system, comprising:
a means for receiving electronic communications from a plurality of vendors prior to receiving job data from a buyer pertaining to a job for which the buyer seeks a vendor, the electronic communications being used in establishing a plurality of vendor records which are stored in an electronic memory associated with the computer system, the vendor records corresponding to each of a plurality of vendors and having vendor

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capability data identifying a plurality of capabilities for said vendor to provide a customized good or service;
a means for receiving an electronic communication from any buyer using the system providing information identifying a plurality of vendors for inclusion in a pool of vendors associated with said buyer to potentially receive a job solicitation, wherein the system stores electronic data sufficient to identify every vendor pool and its association with a corresponding buyer based upon the buyer transmitted vendor pool identification information which occurs prior to analysis of job data pertaining to a job for which bids are sought by or on behalf of the buyer;
a means for receiving an electronic communication defining a job data from or on behalf of at least one buyer, after said buyer's vendor pool is determined, said job data including a job descriptor data which specifies a plurality of characteristics of said customized good or service for which said buyer wishes a bid;
a means for automatically comparing via a computer processor said vendor records to said job data, wherein said comparing includes comparing said plurality of characteristics for said customized good or service with corresponding plural capabilities for vendors from the pool of vendors associated with said buyer;
a means for automatically identifying via a computer processor at least one subset from the buyer's associated pool of vendors as qualified for receiving the solicitation, based on said comparison;
a means for transmitting the solicitation to only selected members from the identified subset of the buyer's associated pool of vendors;
a means for receiving bid response data from at least one of said vendors which received said solicitation, said bid response data identifying each of the vendors from which it was received and a bid price;
and a means for outputting to said buyer an electronic communication providing at least one of said bid response data.

Claim 1 of the '143 patent states:

A method for facilitating a buyer's selection of a vendor via automated comparison of records and bidding by vendors for customized goods or services via a computer operated system, comprising the steps of:
prior to processing job data from a buyer pertaining to a job for which the buyer seeks a vendor, receiving and processing electronic communications from a plurality of vendors, the electronic communications being used in establishing a plurality of vendor records which are stored in an electronic memory associated with the computer system, the vendor records corresponding to each of a plurality of vendors and having vendor capability data identifying a plurality of capabilities for said vendor to provide a customized good or service;
receiving an electronic communication from or on behalf of any buyer using the system which provides information identifying a plurality of vendors for inclusion in a pool of vendors associated with the buyer to potentially receive a job solicitation, and storing electronic data sufficient to identify every vendor pool and its association with a corresponding buyer based upon the received electronic communications from the buyers providing vendor pool identification information, the vendor pool identification information being processed prior to analysis of job data pertaining to a job for which bids are sought by or on behalf of the buyer;

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receiving an electronic communication defining a job data from or on behalf of at least one buyer after the buyer's vendor pool is determined, the job data including a job descriptor data which specifies a plurality of characteristics of said customized good or service for which the buyer wishes a bid;
automatically comparing via a computer processor said vendor records to said job data, wherein said comparing includes comparing said plurality of characteristics for said customized good or service with corresponding plural capabilities for vendors from the vendor pool of vendors associated with the buyer;
automatically identifying via a computer processor at least one subset from the buyer's associated pool of vendors as qualified for receiving the solicitation, based on said comparison;
thereafter transmitting the solicitation to only selected members from the identified subset of the buyer's associated pool of vendors;
receiving bid response data from at least one of said vendors which received said solicitation, said bid response data identifying a bid ...

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