Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 1 of 113 PageID #: 1112
`
`1
`
` IN THE UNITED STATES DISTRICT COURT
` FOR THE DISTRICT OF DELAWARE
`
`13:12:40
`
`AQUACONNECT, INC., )
` )
` Plaintiff, )
` ) C.A. No. 18-1572(MN)
`v. )
` )
`TEAM VIEWER US, LLC. )
` )
` Defendant. )
`____________________________)
` )
`VB ASSETS, LLC, )
` )
` Plaintiff, )
` ) C.A. No. 18-1572(MN)
`v. )
` )
`AMAZON.COM, INC., et al., )
` )
` Defendants. )
`
`
`
`
`Thursday, August 20, 2020
`10:00 a.m.
`Omnibus 101 Teleconference
`
`844 King Street
`Wilmington, Delaware
`
`BEFORE: THE HONORABLE MARYELLEN NOREIKA
` United States District Court Judge
`
`APPEARANCES:
`
` GLASER WEIL FINK HOWARD AVCHERI & SHAPIRO, LLP
` BY: LAWRENCE M. HADLEY, ESQ.
` -and-
`
`
`
`1
`
` IN THE UNITED STATES DISTRICT COURT
` FOR THE DISTRICT OF DELAWARE
`
`13:12:40
`
`AQUACONNECT, INC., )
` )
` Plaintiff, )
` ) C.A. No. 18-1572(MN)
`v. )
` )
`TEAM VIEWER US, LLC. )
` )
` Defendant. )
`____________________________)
` )
`VB ASSETS, LLC, )
` )
` Plaintiff, )
` ) C.A. No. 18-1572(MN)
`v. )
` )
`AMAZON.COM, INC., et al., )
` )
` Defendants. )
`
`
`
`
`Thursday, August 20, 2020
`10:00 a.m.
`Omnibus 101 Teleconference
`
`844 King Street
`Wilmington, Delaware
`
`BEFORE: THE HONORABLE MARYELLEN NOREIKA
` United States District Court Judge
`
`APPEARANCES:
`
` GLASER WEIL FINK HOWARD AVCHERI & SHAPIRO, LLP
` BY: LAWRENCE M. HADLEY, ESQ.
` -and-
`
`
`
`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 2 of 113 PageID #: 1113
`
`2
`
`
`APPEARANCES (Cont'd):
`
` HATCH LAW PC
` BY: RYAN HATCH, ESQ.
` Counsel for the Plaintiff
` AquaConnect, Inc.
`
` DLA PIPER
` BY: BRIAN BIGGS, ESQ.
` BY: MICHAEL JAY, ESQ.
` BY: WILLIAM L. BARTOW, ESQ.
` Counsel for the Defendant
` TeamViewer US, LLC
`
` WILSON SONSINI GOODRICH & ROSATI
` BY: IAN R. LISTON, ESQ.
` BY: JAMES C. YOON, ESQ.
` Counsel for the Plaintiff
` VB Assets, LLC
`
` ASHBY & GEDDES
` BY: STEVEN BALICK, ESQ.
` -and-
` FENWICK & WEST
` BY: DOHYUN AHN, ESQ.
` BY: VIGEN SALMASTLIAN, ESQ.
` Counsel for the Defendant
` Amazon.com, Inc.
`
` - - - - - - - - - - - - - - -
`
`
`
`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 3 of 113 PageID #: 1114
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`THE COURT: Good morning, counsel. Who is
`there, please?
`MR. HADLEY: This is Lawrence Hadley with Glaser
`Weil. A bunch of people were in a different meeting. I
`guess we had all used the link and that put us into a
`different meeting so I think everybody is in the process of
`switching over to this. But I guess there was some
`confusion.
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`THE COURT: Okay. No problem. We can give
`folks a couple of minutes if we need to.
`MR. HADLEY: Thank you. There were about six of
`us in a different room, and I think we all came to the
`conclusion that we had somehow -- some were different than
`everybody else.
`THE COURT: Okay. Just let me know when you
`think everyone is on.
`MR. HADLEY: Okay. I have got a pretty good
`idea of who was in the other room with me.
`THE COURT: Okay.
`So is everyone here? I'll get the specific
`names in a minute, but let me just ask, is everyone here for
`AquaConnect?
`MR. HADLEY: Yes, Your Honor, everyone is here
`for AquaConnect.
`THE COURT: I heard for TeamViewer. How about
`
`
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`for VB Assets?
`MR. LISTON: Good morning, Your Honor. This is
`Ian Liston from WSGR. I'm waiting for my colleague from
`Palo Alto, Jim Yoon, to join. He's calling now. I'll try
`to resolve any difficulties.
`THE COURT: Just so we're clear, are the folks
`from Amazon on?
`MR. AHN: Yes, Your Honor, Dave Ahn from
`Fenwick. I think Steve Balick, our local counsel, may have
`been in the other room, but I think he's joining now.
`THE COURT: Let's just give it a couple more
`
`minutes.
`
`MR. BALICK: Your Honor, it's Steve Balick. I'm
`sorry for the confusion. Me and eight others were on what
`we thought was the right link and it turns out we were in
`the parallel meeting room. We all logged off that other
`room and are logging back on here. I'm not sure if we have
`everyone, but I see some of those who were on the other
`line, so we may need to do a roll call, but I think we're
`all straightened out now.
`THE COURT: I think folks have said most of the
`people are on. I think it's just Mr. Liston waiting for his
`co-counsel, but we'll take a roll call in a few minutes.
`We'll just give them a few more minutes.
`MR. BALICK: Thank you, Your Honor.
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 5 of 113 PageID #: 1116
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`MR. LISTON: Your Honor, that's everybody for VB
`Assets. Thank you.
`THE COURT: So let's take a roll call just so we
`know who is on and we can identify if anyone who needs to be
`on is not, and then we can start. So let's start with the
`AquaConnect case. Who is on for AquaConnect?
`MR. BARLOW: Mr. Hadley, I believe you're muted.
`MR. HADLEY: Good morning, Your Honor. This is
`Lawrence Hadley, Glaser and Weil, representing AquaConnect.
`And with me is Ryan Hatch also representing AquaConnect.
`THE COURT: Okay. Good morning to you. Who is
`going to be arguing for AquaConnect, you, Mr. Hadley?
`MR. HADLEY: Yes, Your Honor.
`THE COURT: Who is on for TeamViewer?
`MR. BIGGS: Good morning, Your Honor. This is
`Brian Biggs from DLA Piper on behalf of defendant
`TeamViewer. With me on the line is Michael Jay out of DLA
`Piper's Los Angeles office, and William Bartow out of DLA
`Piper's Philadelphia office.
`THE COURT: Good morning to all of you as well.
`Now can we move to the VB Assets case. Who is
`on for the plaintiff?
`MR. LISTON: Good morning, this is Ian Liston
`from WSGR's Delaware office on behalf of VB Assets. With me
`is Jimmy Yoon from our Palo Alto office. And he'll be
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 6 of 113 PageID #: 1117
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`arguing today.
`THE COURT: Good morning to you as well. And
`for the defendants in that case?
`MR. BALICK: Your Honor, Steven Balick from
`Ashby & Geddes along with David Ahn and Vigen Salmastlian,
`and also Scott Sanford from Amazon is on the line.
`THE COURT: Okay. Good morning to all of you.
`So we are here today for argument on motions to dismiss in
`two cases, AquaConnect v. TeamViewer, Civil Action
`No. 18-1572, and VB Assets v. Amazon, Civil Action
`No. 19-1410. We are connecting this hearing by Zoom and
`over the telephone. I have the patents and the complaint
`here, the operative complaints here in front of me and I
`have received copies of demonstratives for the VB Assets
`case and I just received Plaintiff's slides in the
`AquaConnect case this morning. I'm in chambers alone, and I
`didn't get these with enough time for them to print out so I
`don't have them available to write notes on, but I do have
`them electronically.
`And I assume most things will be shown to me on
`the screen, but I ask when you refer to the demonstratives,
`the patents or anything else, that you try to call out the
`specific page numbers, column numbers, et cetera, and
`describe what we're looking at so that I can make sure that
`I'm oriented if I'm looking at the actual document and not
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 7 of 113 PageID #: 1118
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`
`simply a slide.
`I ask that each time you start to speak you
`identify yourself. My court reporter, Dale Hawkins, is also
`remote and it helps him to get a clear record when you
`identify yourself.
`I note that asking questions for me is a little
`bit more difficult in these circumstances because the phone
`doesn't always cut over immediately and you may not hear
`that I'm asking something, so if I say wait wait or stop
`stop a few times, I apologize, I'm probably not expressing
`frustration with you but rather trying to get your attention
`under the constraints of the system.
`Finally, I will remind you that recording or
`broadcasting of these proceedings is not permitted.
`Are there any questions before we begin? Okay.
`Hearing -- someone going to say something? No? Okay. So I
`guess then we can start. And I would like to begin with
`AquaConnect. TeamViewer, it's your motion so I will hear
`from you first.
`MR. JAY: Thank you, Your Honor. This is
`Michael Jay from DLA Piper on behalf of TeamViewer. So the
`claims of the '502 and '386 Patents are aimed at nothing
`more than the abstract idea of transferring data. They
`recite transferring basic user data between different
`programs on the same computer and then transmitting that
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 8 of 113 PageID #: 1119
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`same data to a remote computer. And these claims are
`entirely results operated, they recite basic means for how
`the data is transferred, but they don't recite any specific
`method for transferring data that would move the claims out
`of the realm of extraction.
`Now, beyond the transfer of data, the claims,
`probably the best place to start would be claim 1 of the
`'502 Patent which we believe is one of the representative
`claims. And for that claim beyond the transfer of data, the
`claim recites one of the programs running on the host
`computer generating user data and determining what portion
`of the user data was updated. However, the claims are
`entirely result oriented. They say nothing about how the
`program actually goes about generating user data or how that
`same program goes about determining what user data was
`updated.
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`Now, in arguing that the claims are not directed
`to an abstract idea, AquaConnect stated in its opposition
`that the claims citing a specific method for transmitting
`data or a Mach-derived system. That simply isn't right. If
`we look at the plain language of the claims, we see that the
`claims actually tell us very little about how the data is
`transmitted. And what it does tell us is nothing more than
`the most basic generic methods of doing so. For instance,
`the transfer data between the programs on the host computer,
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 9 of 113 PageID #: 1120
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`the claim tells us only that it happens via a system
`communication facility which is -- I think the claim states
`is one of a socket filed port or pipe. And even according
`to the specification of the patents there is certainly
`nothing novel about these means of transferring data. And
`importantly, there is absolutely nothing in the claims about
`the actual method by which the data is transferred.
`And the same is true about transmitting data
`between the host computer, I think the agent client and the
`remote computer. There all the claims tell us is that the
`transfer takes place over a network, something that
`certainly isn't novel or specific.
`Nowhere in AquaConnect's opposition does it
`actually point to any remotely specific method of
`transferring data.
`So what AquaConnect appears to be referring to
`when it says specific method is the fact that data is first
`transferred from one program to another program and in that
`second program the agent client transmits the data through
`to a remote computer. The claims speak in terms of agent
`client and agent server, but those are really nothing more
`than fancy words that the patentee used for two different
`programs running on the host computer. Again, this is
`nothing but generic computer software.
`Transferring data between two programs and
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`transferring it to a different computer is a quintessential
`abstract idea. AquaConnect also focuses on this taking
`place on a Mach-derived system. Again, there is nothing
`really specific about that that would remove this from being
`an abstract idea. According to AquaConnect, and we heard
`this at the claim construction hearing, Mach-derived is
`nothing more than the MAC and IOS operating systems,
`basically anything running on an Apple device. It's hardly
`narrow or specific.
`Now --
`THE COURT: What about the argument that this is
`an improvement in that what we're talking about is there was
`a problem of how to securely and synchronously update user
`data in these particular Mach-derived systems and to do that
`in a timely way. And this was an improvement in the
`technology of how that is done, and that there are aspects
`of this that the creating at the contexts, the two contexts
`that are used, the agent client, the server client. Tell me
`how that fits in with your theory that this is just a method
`in functional terms that is nothing more than kind of
`generic computer components. It seems to me like there are
`some additional things in there that you're not really
`addressing.
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`MR. JAY: Sure. So really if you look -- I had
`seen AquaConnect's slides from this morning and they point
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 11 of 113 PageID #: 1122
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`to some diagrams that make sort of what's going on here look
`much more complex than it actually is. But really, all
`we're talking about are we have the host computer and we
`have two different programs running on the host computer in
`two different contexts. If we look at the specification of
`the '502 Patent, for instance, there is really nothing in
`there whatsoever that tells us what the contexts are or
`provides any real detail about what the agent server does or
`what the agent client does. All that the specification is
`telling us is that the agent client and agent server --
`THE COURT: Are you looking at a particular part
`of the specification or what?
`MR. JAY: I'm just talking about the
`specification in general. But here I'll find -- if we look
`at -- if we look at the '502 Patent, column 4, lines 13 to
`34, that's a paragraph in the specification that's talking
`about the agent server and the agent client. And really
`this is sort of the total of what we see in the
`specification about what actually the agent client and the
`agent server actually are doing.
`And here we look, see in line 13, the paragraph
`starts the KBM agent server 106 and the KBM client 110
`provide remote input and output for user context 104 hosted
`by the operating system 102. It goes on to say that the
`agent server and the agent client can seek input from
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 12 of 113 PageID #: 1123
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`something like a keyboard or a mouse and then it can output
`essentially transmitting that information.
`So really, all we're talking about is really
`basic software, basic programs that do nothing more than
`receive input and then send out output. I think sort of
`using the terminology of the patent, agent server, agent
`contact makes it sound as though we're talking about perhaps
`a more complex process than we actually are. Here there
`really is nothing that complex or even inventive about any
`one of these things. There is nothing in the specification
`that says that an agent server or agent client didn't exist
`before these patents or that placing things in different --
`running these programs in different contexts hadn't been
`done before. There is nothing in the specification that
`tells us how to -- how these programs really perform or how
`to put these things in different contexts, so if this was
`new, essentially the specification wouldn't actually enable
`anything that's new because it doesn't tell us how to do it
`in the patent itself. The fact that it doesn't describe any
`of those things in the level of remote detail indicates that
`the patentee was certainly assuming that those things, these
`agent server, agent client, and the different contexts is
`something that a POSA would certainly understand without
`needing to describe it. And the reason for that is because
`it existed before. There was nothing new about it. Having
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 13 of 113 PageID #: 1124
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`a computer where you had two different programs sharing
`information between one another and then at one point one of
`those programs then sends out that data to a remote
`computer, that's really all we're talking about here.
`So we have the way that AquaConnect describes it
`or some of the diagrams in their slides are really talking
`about sort of a much more complex scenario than we have
`certainly in the claims and even in the specification
`itself.
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`So what we're talking about here is really
`something that's quite basic and really does not go outside
`of the level of abstraction that would be necessary to make
`it patent eligible.
`THE COURT: Okay. Mr. Hadley, let me ask you
`before you begin. I sent out an order in this case asking
`about what claims were being contested here and the response
`was that all seventy-seven claims were. But is it true, and
`maybe I misunderstood the Defendants' letter, but are all of
`those claims currently being asserted in this case?
`MR. HADLEY: Your Honor, my understanding is
`that not all seventy-seven claims are being asserted. I
`believe the opening brief by TeamViewer specified the claims
`that were being asserted. I don't have right in front of me
`the actual claims that are being asserted, but we can
`certainly get that to you.
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 14 of 113 PageID #: 1125
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`THE COURT: Okay. So just so we're all clear
`here, you're not going to trial on 77 claims if these claims
`survive this motion here today. So I understand you don't
`know what claims are currently being asserted, but you all
`need to limit the number of claims asserted and the prior
`art and everything else, work together to get that down to a
`reasonable number because the fact that someone is asking me
`to deal with seventy-seven claim terms at this stage in the
`litigation, which is more advanced than some of the other
`cases where I get these motions, is a bit troubling to me.
`So we can address what needs to be addressed today, but you
`need to start thinking about what you're actually planning
`to move forward on and get it down to a reasonable number.
`So with that being said, let me hear your
`response to what the Defendant said.
`MR. HADLEY: Okay. Your Honor, let me bring up
`my screen. And hopefully can you see the presentation that
`I have on my screen, Your Honor?
`THE COURT: I can. Thank you.
`MR. HADLEY: Okay. First I just wanted to
`brief -- I know Your Honor is familiar with 101 law. I have
`a few slides, just an overview, we have the familiar
`two-step test from Alice and of course the first step is
`whether the claims are directed to a patent ineligible
`concept and if they are not, then the inquiry ends there,
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 15 of 113 PageID #: 1126
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`and if they are, then we go into Step 2.
`The important point here is the accused
`infringer is asserting that the patent lacks patent eligible
`subject matter must prove so by clear and convincing
`evidence. This is very important here. I heard Mr. Jay say
`that a number of different things that are described in the
`claim of the patents, the claims, even the representative
`claims were all known in the prior art and yet there is
`absolutely zero evidence in the moving papers or the reply
`papers showing that anything that was -- is claimed in the
`relevant claims that are at issue were known in the prior
`art.
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`In Step 1, we have got a lot of fairly recent
`Federal Circuit authority particularly as it's pertaining to
`computer claims. And it's becoming fairly well settled that
`what the courts look at is whether the claims focus on a
`specific means or method that improves the relative
`technology or in contrast are directed to a result or effect
`that itself is the abstract idea. If we look at software
`innovation which applies to these patents, the inquiry turns
`on whether claims focus on a specific asserted improvement
`in computer capabilities or instead on a process or system
`that qualifies as an abstract idea for which computers are
`invoked merely as a tool. And it follows then that the
`software claims are patent eligible under Alice Step 1 when
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 16 of 113 PageID #: 1127
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`they're directed to improvements to the functionality of a
`computer or the network platform itself.
`In other cases, the courts have said that claims
`are not directed to an abstract idea when they're not
`necessarily rooted in computer technology in order to solve
`a specific problem in the realm of computer networks, and
`that they satisfy 101. This is actually the most recent
`case in the Federal Circuit on July 14th, they satisfy 101
`when they meet a challenge unique to computer networks and
`detail how this is achieved.
`It's also important to keep in mind when we're
`looking at Section 101 of --
`THE COURT: Let me ask you, in the case that you
`just quoted for me from the Federal Circuit, was that a
`Step 1, a statement at Step 1 or a statement at Step 2?
`MR. HADLEY: These are all statements concerning
`Step 1, Your Honor.
`THE COURT: Okay.
`MR. HADLEY: One of the things that the courts
`in Alice said this in the first step you look to see what
`the claims are directed to. And there have been a lot of
`cases that talk about problems with oversimplifying the
`claims and looking for this, what the claims are directed
`to. And --
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`THE COURT: Right. And I take your point on
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 17 of 113 PageID #: 1128
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`that. And I just want to get a little bit past this since I
`have a long day ahead of me because I have another case
`being heard and I do understand the 101 law. I'll give you
`a chance to say it. I'll take your point on
`oversimplification and Defendants' argument that this is
`just transferring data is maybe oversimplifying things. But
`what is it that these claims are directed to that is an
`improvement or that is not an abstract idea. Tell me in
`your words clearly what it is that you would say they're
`directed to that's not an abstract idea.
`MR. HADLEY: I have a slide on that, and I would
`like to go back and explain exactly why we are saying this,
`but the claims at issue are directed to a patent eligible
`technological and functional improvement that thin client
`computer networks operating with a Mach-derived host
`operating system which allows synchronous and secure
`transfer of data between thin clients and the host system.
`It's not simply data transfer. Let me explain why that is.
`In order to do that we have to start off with understanding
`what problem existed in the prior art that this invention
`set out to solve. As explained in the patent, the system
`involved, it's a network that has a plurality of users.
`Here we illustrate this with users A, B and C. Each of
`these users has a keyboard, a video and a mouse to import
`data. But the important thing is the work that's being done
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 18 of 113 PageID #: 1129
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`by users A, B and C is taking place on a host system. The
`applications that these users are running are not on the
`user systems themselves or the user computers themselves,
`they are operating on a host system and the network is then
`providing the information going back and forth between the
`host system and the network. And this creates a problem.
`Each of these systems are running on the network
`and in order to do that, each user has to have what is
`called a context. Mr. Jay kind of skipped over what a
`context was, but it's explained in the patent. And in order
`to have this type of a network where the applications are
`running on the host system and the users, say on a system in
`the Cloud, and the users are acting remotely from that
`system, separate data called a context is required for each
`user.
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`So what is a context? A context is the minimum
`amount of data that has to be saved to continue an
`interrupted application. And it includes the information
`that each user sees on his or her screen.
`So you can think of each user almost as an
`island and the data that they need to continue to operate,
`let's say they're using Google docs which operates in the
`Cloud, if the user stops working for a while and user A and
`user B is working, then a certain amount of data has to be
`saved for user A so that when user A picks back up again,
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 19 of 113 PageID #: 1130
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`nothing has changed on his or her screen and they can
`continue working the application.
`THE COURT: Okay.
`MR. HADLEY: So the problem then is that the
`network, the updating of say the screen, so if user A moves
`his or her mouse, that movement has to take place or be
`processed on the host system and the change to the display
`has to be communicated back through the operating system,
`through the network interface to the network and then to
`user A and user A's screen has to be updated. The problem
`you have when you have multiple users in this kind of a
`system is that only one user context can operate through the
`network interface at a time.
`So in Mach-derived operating systems, that is a
`well-known, presented a well-known synchronous problem, or
`problem with synchronizing the data transfer. Because if
`user A moves her mouse and user B or user C is -- has
`control of the network interface at the time, then there is
`going to be a lag. The user A won't see the movement
`instantaneously on her screen. Instead the user A will have
`to wait to have the screen updated until user B or user C
`relinquishes control of the network interface. This was a
`well-known problem regarding synchronous in Mach-derived
`operating systems at the time of this invention.
`By the way, this isn't a problem that takes
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`Case 1:19-cv-01410-MN Document 56 Filed 09/10/20 Page 20 of 113 PageID #: 1131
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`place with Windows or some other operating systems, this was
`a problem unique to Mach-derived operating systems. So that
`created an inefficiency because of this lag time in these
`types of network environments and the fact that the actions
`won't be displayed immediately.
`There were a number of solutions that were tried
`in the prior art, but none of them were actually
`synchronous. So in other words, you still have the delay,
`it just reduced the delayed time. But in order to reduce
`the delayed time, the user context, for example, the
`information that was needed or the data that was needed for
`user A to continue operating would become exposed to the
`other users in the network. While you can speed up this lag
`time, it created a security problem. And again, these were
`all well-known problems documented in the prior art. And so
`it never really -- the solutions never really solved the
`problems, but they created a different problem which was
`security. In other words, the contexts for A, B and C were
`no longer isolated items.
`So what was the patented solution? And this is
`where we get into was there a functional or technological
`improvement with this invention. And there was. What the
`inventor did was come up with the idea of adding what he
`called a KBM server for each user context, and we can see
`that before. So for user A, B and C, there was protocol,
`
`10:42:
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