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Helios Software, LLC v. Spectorsoft Corporation

United States District Court, D. Delaware

September 18, 2014

HELIOS SOFTWARE, LLC and PEARL SOFTWARE, INC., Plaintiffs,
v.
SPECTORSOFT CORPORATION, Defendant.

Adam W. Poff, Esq., Monte T. Squire, Esq., Pilar G. Kraman, Robert M. Vrana, YOUNG, CONAWAY, STARGATT & TAYLOR LLP, Wilmington, DE.

Cabrach J. Connor, Jeffrey R. Johnson, REED & SCARDINO LLP, Austin, TX. Attorneys for Plaintiffs.

Rex A. Donnelly, RATNER PRESTIA, Wilmington, DE.

James P. Martin, SHARTSIS FRIESE LLP, San Francisco, CA. Attorneys for Defendant Spectorsoft Corporation.

MEMORANDUM OPINION

LEONARD P. STARK, District Judge.

Pending before the Court are the following motions:

1. Plaintiffs' Motion to Exclude Certain Opinions of SpectorSoft's Expert Geoff A. Cohen, Ph.D. (D.I. 332);

2. Defendant SpectorSoft Corporation's Daubert Motion to Exclude Opinions and the Proposed Expert Testimony of Scott Weingust on Damages (D.I. 340)

3. SpectorSoft Corporation's Motion for Partial Summary Judgment of Non-Infringement of the '237 Patent (D.I. 329);

4. SpectorSoft Corporation's Motion for Partial Summary Judgment of Non-Infringement of the '571 Patent (D.I. 330);

5. SpectorSoft Corporation's Motion for Partial Summary Judgment of Non-Infringement of the '304 Patent (D.I. 331);

6. SpectorSoft Corporation's Motion for Partial Summary Judgment of Non-Infringement by Spector PRO, eBlaster, and eBlaster Mobile (D.I. 338);

7. SpectorSoft Corporation's Motion for Partial Summary Judgment of No Willful Infringement (D.I. 339);

8. SpectorSoft Corporation's Motion for Partial Summary Judgment Regarding Limitations on Damages (D.I. 337);

9. SpectorSoft Corporation's Motion for Partial Summary Judgment of Invalidity of the '304 Patent (D.I. 334);

10. SpectorSoft Corporation's Motion for Partial Summary Judgment of Invalidity of the '571 Patent (D.I. 335);

11. Plaintiffs' Motion for Summary Judgment Regarding Defendant SpectorSoft Corporation's Second and Third Affirmative Defenses for Prosecution History Estoppel, Lack of Patentable Subject Matter Under 35 U.S.C. § 101, and Lack of Written Description, Non-Enablement, and Indefiniteness Under 35 U.S.C. § 112 (D.I. 341); and

12. Plaintiffs' Motion for Leave to Amend the Complaint (D.I. 442).

I. BACKGROUND

On January 26, 2012, Plaintiffs Helios Software, LLC ("Helios") and Pearl Software, Inc. ("Pearl") (collectively, "Plaintiffs") filed a complaint against Defendant SpectorSoft Corporation ("SpectorSoft" or "Defendant") alleging infringement of U.S. Patent Nos. 6, 978, 304 (the '304 Patent") and 7, 634, 571 (the '571 Patent"). (D.I. 1) On March 22, 2012, Plaintiffs filed an amended complaint adding allegations of infringement of U.S. Patent No. 7, 958, 237 (the '237 Patent"). (D.I. 9)

Fact and expert discovery are complete, but no trial date has been set. The Court heard oral argument on the pending motions on July 22, 2014. (D.I. 445) ("Tr.")

II. LEGAL STANDARDS

A. Daubert Motions to Exclude

In Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993), the Supreme Court explained that Federal Rule of Evidence 702 creates "a gatekeeping role for the [trial] judge" in order to "ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand." Rule 702 requires that expert testimony "help the trier of fact to understand the evidence or to determine a fact in issue." Expert testimony is admissible only if "the testimony is based on sufficient facts or data, " "the testimony is the product of reliable principles and methods, " and "the expert has reliably applied the principles and methods to the facts of the case."

There are three distinct requirements for proper expert testimony: (1) the expert must be qualified; (2) the opinion must be reliable; and (3) the expert's opinion must relate to the facts. See Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000).

B. Summary Judgment

Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he 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." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). An assertion 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 purposes of the motion 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 (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 (2000).

To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586; see also Podobnik v. U.S. Postal Serv., 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). However, 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 only 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 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (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"). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's position is insufficient to defeat a motion for summary judgment; there must be "evidence on which the jury could reasonably find" for the nonmoving party. Anderson, 477 U.S. at 252.

III. DISCUSSION

A. Plaintiffs' Motion to Exclude Certain Opinions of SpectorSoft's Expert Geoff A. Cohen, Ph.D. (D.I. 332)

Plaintiffs ask the Court to exclude certain opinions of SpectorSoft's validity expert, Dr. Geoff A. Cohen, because: (1) Dr. Cohen's experimental testing analysis appeared for the first time in his Reply Report; (2) Dr. Cohen did not produce all test data files, rendering his experimental testing analysis unreliable; (3) Dr. Cohen incorrectly applies the legal standard for inherency; and (4) Dr. Cohen set forth an obviousness theory in his Reply Report based upon one combination of the Freund '611 patent and Pearl's Cyber Snoop software but indicated during his deposition that he intended to testify at trial on any of sixteen different combinations of these two references.

In his Opening Report, Dr. Cohen opined that ODSE, LapLink, the Freund Patent, and Pearl's Cyber Snoop software all rendered the asserted claims invalid for lack of novelty and/or nonobviousness. Dr. Cohen did not disclose a network capture analysis in his Opening Report. (See D.I. 326-2 IA00751 at 66:14-16)

Dr. Scott Nettles, Plaintiffs' validity expert, in his Rebuttal Report criticized various portions of Dr. Cohen's Opening Report for not providing evidence of actually testing the products. Subsequently, for his Reply Report, Dr. Cohen performed testing and presented his testing data to respond to Dr. Nettles' criticisms. Plaintiffs argue that "Dr. Cohen could have performed [this] testing analysis before serving his opening report" and, because he failed to do so, his testimony regarding the testing data should be excluded. (D.I. 395 at 3)

Evidence disclosed in an expert report is proper "if the evidence is intended solely to contradict or rebut evidence on the same subject matter identified by another party." Fed.R.Civ.P. 26(a)(2)(D)(ii). Rebuttal evidence is properly admissible when it will "explain, repel, counteract or disprove the evidence of the adverse party." Crowley v. Chait, 322 F.Supp.2d 530, 551 (D.N.J. 2004) (citing United States v. Chrzanowski, 502 F.2d 573, 576 (3d Cir. 1974)). Reply reports "may cite new evidence and data so long as the new evidence and data is offered to directly contradict or rebut the opposing party's expert." Withrow v. Spears, 2013 U.S. Dist. LEXIS 122489, at *45 (D. Del. Aug. 22, 2013); see also Crowley, 322 F.Supp.2d at 551 (stating that courts need not "automatically exclude anything an expert could have included in his or her original report. Such a rule would lead to the inclusion of vast amounts of arguably irrelevant material in an expert's report on the off chance that failing to include any information in anticipation of a particular criticism would forever bar the expert from later introducing the relevant material. All that is required is for the information to repel other expert testimony...").

Plaintiffs seek to exclude Dr. Cohen's testing data because "Dr. Cohen could have performed testing analysis before serving his Opening Report, " but he decided not to. (D.I. 395 at 3) In explaining the lack of testing data in his Opening Report, Dr. Cohen testified that he "thought that the disclosures from the documentation were clear and convincing, and I didn't feel like I needed to do [testing]. It's very time intensive, and I was conscious of time and budget. And I didn't think it was necessary to demonstrate the points, you know." (D.I. 326-2 IA00751 at 66:7-24) For example, Dr. Nettles argued that Dr. Cohen had failed to demonstrate that LapLink and ODSE terminated certain sessions. Dr. Cohen testified that these sessions terminated but he did not initially conduct experimentation to show termination of these sessions. (D.I. 322 at IA00352-53 ¶¶ 177-78) But after Dr. Nettles leveled his criticisms, Dr. Cohen performed the testing to support his testimony. This is precisely the type of "evidence [that is] intended solely to contradict or rebut evidence on the same subject matter identified by another party" that Rule 26(a)(2)(D)(ii) permits in rebuttal.

Plaintiffs further contest Dr. Cohen's "new theor[y]" that TCP FIN and RST flags indicate session terminations and initiations, respectively. (D.I. 395 at 3) However, these are not new theories. Dr. Cohen opined in his Opening Report that two connections in the LapLink software were concurrent. Dr. Nettles responded that "[c]oncerning 9b, Dr. Cohen does not provide convincing support that the another' Internet session is initiated concurrently. It [is] not enough to just be concurrent [to meet the claim limitation]." (D.I. 336 Ex. C ¶ 84) Dr. Cohen's Reply Report simply supports his position that the second session is initiated concurrently with the first. Because the Court does not find the new testing evidence in Dr. Cohen's Reply Report to be outside the scope of his Opening Report, the Court will deny Plaintiffs' request to exclude.

Next, Plaintiffs ask the Court to strike Dr. Cohen's testimony because he allegedly did not produce all test data files, rendering his experimental testing analysis unreliable. Plaintiffs support their claim primarily by pointing out that the file produced by Dr. Cohen containing his experimental data is labeled "experiment4." Plaintiffs ask the Court to presume that at least files "experimentl, " "experiment2, " and "experiment3" exist, although no such files have been produced. The Court will not take this speculative leap, as Defendant has explicitly represented that it has produced "all test data that [Dr.] Cohen considered in forming his opinions." (D.I. 374 at 8) At oral argument, Defendant further represented that it had disclosed all data upon which Dr. Cohen relied.[1]

Plaintiffs next assert that Dr. Cohen's opinions should be excluded because he incorrectly applies the legal standard for inherency. Essentially, Plaintiffs argue that Dr. Cohen committed legal error by applying the anticipation-by-inherent-disclosure doctrine to his obviousness analysis. (See D.I. 395 at 5-6) Plaintiffs contend that "Nasing an obviousness finding on inherency is error; they are distinct concepts." (Id. at 5) Contrary to Plaintiffs' argument, inherent disclosure can play a role in an obviousness analysis. See, e.g., In re Napier, 55 F.3d 610, 613 (Fed. Cir. 1995) ("The inherent teaching of a prior art reference, a question of fact, arises both in the context of anticipation and obviousness."). The relevant question is whether "the inherency would have been obvious to one skilled in the art." Eurand, Inc. v. Mylan Pharm., Inc., 263 F.R.D. 136, 141 (D. Del. 2009). Because Dr. Cohen's testimony relates to whether the inherent disclosure would have been obvious to one skilled in the art, his analysis is not unreliable.

Plaintiffs also assert that Dr. Cohen's testimony is unreliable because he misapplies the facts in his obviousness analysis. (D.I. 395 at 7) According to Plaintiffs, Dr. Cohen relies on inherency to show how the client requests and receives an access configuration. Dr. Cohen testified that "[i]nherently, the client must receive the second network address of the ISP supervisor server from another server at a first network address, such as a DNS server, Active Directory Server, or other similar technologies." (D.I. 397-7 Ex. G at 3) During his deposition, Dr. Cohen testified that:

A. The ISP disclosure for - the system is described for the ISP supervisor to work, there must be a mechanism. This is how they worked at the time. You have a mechanism where you receive the address. DNS is disclosed. There has to be something. There has to be something. Inherently there is something. The address doesn't appear magically on the computer.
Q. So in your opinion, it's - there's necessarily some mechanism that provides a way for the client here to go and retrieve the ISP supervisor address; is that correct?
A. Yes. There has to be some mechanism to do that.

(D.I. 326-20, IA00792 at 231:4-18) Plaintiffs argue that Dr. Cohen's testimony should be excluded because "he provides no analysis or reasoning to support his opinion that the address is provided to the client in the way the claim requires." (D.I. 395 at 8-9) However, just because there is a purported dearth of analysis in Dr. Cohen's testimony does not mean that "the testimony is based on [in]sufficient facts or data" or that "the testimony is the product of [un]reliable ...


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