Case 2:03-cv-00059-TJW Document 193 Filed 07/25/05 Page 1 of 12 PageID #: 5249
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE EASTERN DISTRICT OF TEXAS
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`MARSHALL DIVISION
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`BROOKTROUT, INC.
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`Vs.
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`EICON NETWORKS CORPORATION,
`ET AL.
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`§
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`§
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`§
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`CIVIL ACTION NO. 2:03-CV-59
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`MEMORANDUM OPINION AND ORDER
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`1.
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`Introduction.
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`In this patent infringement case, the plaintiff has filed a motion for a permanent injunction
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`based on the jury’s verdict. The requested injunction is too broad, as it would preclude the sale of
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`a product with multiple non-infringing uses. The court therefore grants in part and denies in part
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`Brooktrout’s motion for a permanent injunction for the reasons expressed in this order.
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`2.
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`Factual Background and Procedural Posture.
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`The plaintiff, Brooktrout Inc. (“Brooktrout”), filed this patent infringement case against the
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`defendants, Eicon Networks Corporation and Eicon Networks, Inc. (collectively “Eicon”), claiming
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`that Eicon induced the infringement of the patents-in-suit by encouraging others to use Eicon’s Diva
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`Server product in configurations which infringed the patents-in-suit. The patents-in-suit are
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`addressed to the routing of inbound facsimile transmissions using direct inward dial (“DID”)
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`numbers.
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`The case proceeded to trial solely on a theory of induced infringement. A theory of
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`inducement, however, necessarily required proof of direct infringement. The plaintiff’s expert, Dr.
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`Case 2:03-cv-00059-TJW Document 193 Filed 07/25/05 Page 2 of 12 PageID #: 5250
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`Thomas Rhyne, explained the plaintiff’s direct infringement theory as follows:
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`Q:
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`A:
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`Q:
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`A:
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`So, can you describe what is required to actually infringe the Giler patent?
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`Basically you’ve got to have a phone connection that’s going to come in and provide
`DID service. You have got to have a computer to service the fax server. I mentioned
`for example a Dell server. You have got to have the Diva card, it’s got to be properly
`configured and interfaced to a piece of software that we tend to call the fax server
`software. You have heard the names of several companies that make them, Esker,
`GFI, these are companies that sell the software, and that software when properly
`configured with the list of names and phone numbers and mailboxes meets the
`requirement. So, you have got to have those things together.
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`And are you aware of examples of such a system?
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`I think I have got–based on a study that both–that I guess primarily you and your law
`firm and I’m not sure what participation Brooktrout was in it there have been five
`companies around the United States that have been identified that have exactly one
`variation of that system or another. They have got an Eicon Diva card, they have
`somebody’s fax software, they have a computer, and they are, in fact, using it to
`received faxes and pass them to mailboxes all of the time.
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`Tr. Transcript, November 3, 2004, p. 283, ll. 2-24.
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`Under the plaintiff’s direct infringement theory, the fax application software completes
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`significant steps in the methods of the asserted claims. Dr. Rhyne explained:
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`A:
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`. . . In this case, the application that we’re talking about are these fax server
`applications that reach down into the card and pull out the fax and put it into a
`directory of some kind, and then using the digits say, here is the fax, and send them
`to the right mailbox.
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`Id. at 285, ll. 20-25. As Dr. Rhyne’s testimony reveals, it is only when the Diva Server card is
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`combined with multiple other components and used in connection with the inbound routing of
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`facsimile transmissions using DID numbers that the claims of the patent are directly infringed.
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`As foreshadowed by the quoted testimony of Dr. Rhyne, the plaintiff’s liability and damages
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`case relied on a showing that five users of the Diva Server directly infringed certain claims of the
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`Case 2:03-cv-00059-TJW Document 193 Filed 07/25/05 Page 3 of 12 PageID #: 5251
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`patents in suit by actually using the Diva Server with applications software for the inbound routing
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`of facsimile transmissions using DID. These users included Alcon Labs, BellSouth, Kimberly Clark,
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`TAG/TMI, and NRI Staffing Resources. In addition to these five customers, the evidence, viewed
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`in the light most favorable to the jury’s verdict, suggests that many other users of the Eicon Diva
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`Server card will purchase fax application software and configure the product and software to route
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`incoming facsimile transmissions using DID. Stated another way, it is virtually undisputed (and this
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`court has assumed) that a significant number of end-users of the Diva Server will use it to directly
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`infringe the patents-in-suit. The court has also assumed that the defendants in this case know “to a
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`moral certainty” that many United States users of its product will configure it in infringing systems.
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`Any view of the evidence, however, must account for the undisputed fact that the Diva
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`Server, standing alone, does not infringe any claim of the patents-in-suit. Dr. Rhyne’s testimony was
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`unequivocal on this point:
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`Q:
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`A:
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`Q:
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`A:
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`Okay. Now, does the Eicon Diva Server card all by itself infringe any of the claims
`of the Giler patent?
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`Absolutely not.
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`Why not?
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`Well, because the way Mr. Giler’s claims were written, they really claimed the
`system that actually have–he actually has two types of claims. One type is called an
`apparatus claim which deals with hardware, and the other one is a method claim
`which deals with how you use something. And in both cases his claims encompass
`not just the card, but also the rest of the system that receives the DID numbers and
`makes the association to the computer network location that in this case I have
`illustrated as a mailbox. So, you have got to have more than just the card.
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`Id. at 282, l. 13-283, l. 1. Any view of the evidence must also accept the undisputed fact that the
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`Diva Server has multiple non-infringing uses, including its ability to route voice calls and to facilitate
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`outbound facsimile transmissions.
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`In addition to its evidence of direct infringement by the five specific users of the Diva Server,
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`the plaintiff offered evidence which tended to show that Eicon had induced infringement of the
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`patents-in-suit. First, the plaintiff pointed to a technical document, or white paper, which explained
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`the Diva Server’s ability to accept and route inbound facsimile transmissions onto computer
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`networks using DID. The plaintiff also pointed to the defendants’ business associations with
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`application software vendors, including those who write fax application software. Furthermore, the
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`plaintiff proved the existence of various user manuals available on the defendants’ United States and
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`international web sites which showed how to configure the Diva Server to accept DID signals in
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`connection with facsimile transmissions. Finally, the plaintiff showed that the card itself was
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`configured, before trial, to default to DID settings.
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`The jury also heard evidence from Eicon that it did not intend to induce anyone to infringe
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`the patents and did not even know about the patents until early 2003. Eicon urged that it modified
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`its United States web site, took down the white paper, re-programmed its default settings, and put
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`warnings to users on its product. Eicon urged that these facts, considered collectively, demonstrated
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`its lack of intent to induce the infringement of the patents in suit.
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`The jury found Eicon liable for inducing infringement of the patents-in-suit. To return its
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`findings of induced infringement, the jury necessarily found that the defendants had encouraged, at
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`a minimum, some of their customers to engage in activity which directly infringed the claims of the
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`patent in suit. The jury awarded damages in the amount of $94,500 for past infringement. The jury
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`failed to find that the defendants’ infringement was willful, and the jury failed to find that the
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`asserted claims were invalid.
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`Based on the jury’s findings of induced infringement, Brooktrout seeks the following
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`permanent injunction against the defendants:
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`Eicon Networks Corporation, Eicon Networks, Inc., and their officers, agents,
`servants, employees, and attorneys, and those persons in active concert or
`participation with them who receive actual notice of the order by personal service or
`otherwise shall be permanently enjoined from inducing infringement of United States
`Patent Nos. 5,291,546 and 5,488,651 by encouraging, supporting, aiding, or abetting
`the use of the Eicon Diva Server in a fax server for the inbound routing of faxes
`based on dialed telephone numbers. Eicon Networks Corporation and Eicon
`Networks, Inc. are hereby ordered, at its option, to either (a) cease all Diva Server
`sales into the United States channel (via United States distributors or resellers) or (b)
`modify the Diva Server to disable DID capability for fax calls. Nothing in this Order
`shall prohibit Eicon Networks Corporation and Eicon Networks, Inc. from selling the
`Diva Server for use in systems that they have verified will not infringe United States
`Patent Nos. 5,291,546 and 5,488,651.
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`The court’s decision, set forth below, follows the parties’ briefing on the motion and an evidentiary
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`hearing.
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`3.
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`Discussion.
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`A.
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`Legal Principles Applicable to Injunction Requests.
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`The right conferred by a patent is the right to exclude others from making, using, or selling
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`the claimed invention. Permanent injunctions ordinarily should issue following a finding of
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`infringement absent a sound reason for denying an injunction. Richardson v. Suzuki Motor Co., 868
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`F.2d 1226, 1246-47 (Fed. Cir. 1989). The general rule notwithstanding, the scope of a permanent
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`injunction is within the court’s discretion. Although an injunction should provide the patentee with
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`meaningful relief, the order should not impose unnecessary restraints on lawful activity. See Johns
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`Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1365-66 (Fed. Cir. 1998)(“Judicial restraint of lawful
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`noninfringing activities must be avoided.”); Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir.
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`1993) .
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`The principles governing remedial relief cannot be divorced from the liability setting in
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`which they arise. The Diva Server does not, standing alone, infringe any asserted claim, and the
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`plaintiff restricted its case solely to one of induced infringement. Moreover, not all customers use
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`the Diva Server in infringing configurations, and even those that do may put the Diva Server to
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`substantial non-infringing uses. Therefore, the scope of any injunction must be consistent with the
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`Federal Circuit’s observations in Dynacore Holdings v. U.S. Philips Corp., 363 F.3d 1263, 1275-76
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`(Fed. Cir. 2004).
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`In Dynacore, the court considered a claim of induced infringement in a suit concerning
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`network components. The court relied on the general rule that the “mere sale of a product capable
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`of substantial non-infringing uses does not constitute indirect infringement of a patent.” Id. at 1275.
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`The court held that the plaintiff in the case needed to demonstrate that LANs compliant with a
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`particular IEEE standard necessarily infringed the patent in suit or point to a specific instance of
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`direct infringement and restrict its suit to liability stemming from that specific instance. Id. at 1275-
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`76. In particular, the court stated:
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`A defendant’s liability for indirect infringement must relate to the identified instances
`of direct infringement. Plaintiffs who identify individual acts of direct infringement
`must restrict their theories of vicarious liability– and tie their claims for damages or
`injunctive relief –to the identified act. Plaintiffs who identify an entire category of
`infringers (e.g., the defendant’s customers) may cast their theories of vicarious
`liability more broadly, and may consequently seek damages or injunctions across the
`entire category.
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`Dynacore, 363 F.3d at 1274-75 (internal citations omitted)(emphasis added). Bearing these
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`standards in mind, the court now addresses the plaintiff’s claim for injunctive relief.
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`B.
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`Application.
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`At trial, Brooktrout proved that five specific users of the Diva Server had configured the
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`product with the necessary other components (application software, computers, etc.) to infringe the
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`asserted claims of the patents. Brooktrout’s requested injunction, however, goes far beyond these
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`specific instances of conduct. Relying on Dynacore, Brooktrout contends that it is entitled to a broad
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`injunction because it has shown that a “class” of infringers exists. Brooktrout defines the class to
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`be all users of the Diva Server who receive inbound faxes using DID. The class so defined,
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`Brooktrout asks for an injunction barring the United States sales of Eicon’s product into its
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`distribution channel. Alternatively, Brooktrout would require Eicon to modify the card to render it
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`incapable of use in an infringing configuration. Dynacore counsels the court to reject this argument
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`and narrowly tailor the scope of the requested injunction.
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`Brooktrout has not shown that a class exists sufficient to justify its proposed injunction. This
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`is true even though the evidence submitted at trial persuades the court that more than five users
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`directly infringe the patents-in-suit and that Eicon is aware of that infringement. The problem is that
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`Brooktrout locates its class by defining it in terms of users who perform the methods of the asserted
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`claims. This approach renders Dynacore’s first option (the identification of specific infringers)
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`meaningless. Rather than tying claims for injunctive relief to specific instances of direct
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`infringement, a patentee could always avoid Dynacore by pointing to a single infringer for liability
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`purposes and, in the remedial phase, presenting a class of “all customers who use the product to
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`perform claim limitations a, b, and c.” Dynacore does not permit this approach.
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`Under different facts, the court might be persuaded to issue a broader injunction. If, for
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`instance, the evidence persuaded the court that all (or even nearly all) of the defendant’s customers
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`necessarily used the product to perform the claimed invention, then a class of infringers might exist
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`sufficient to justify a ban on future sales of the product. A court is justified in issuing such relief if
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`the court is persuaded that such a ban is necessary to stop future infringement even though the order
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`has the ancillary effect of preventing some lawful uses. See National Instruments Corp. v. The
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`Mathworks, Inc., 113 Fed. Appx. 895 (Fed. Cir. 2004). Such facts do not exist in this case.
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`Brooktrout suggests, however, that its requested injunction does not necessarily foreclose the
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`sale of the Diva Server in the United States. Brooktrout observes that under the terms of the
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`proposed order, Eicon has the option to modify its Diva Server to disable its infringing capabilities.
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`Brooktrout argues that inducement to infringe is, after all, infringement at law, and the burden should
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`properly rest on Eicon to modify its product to further reduce or eliminate the likelihood that
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`downstream purchasers of its product will use the card to complete infringing systems.
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`There are two problems with this argument. The first is Dynacore. Under these facts, an
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`injunction ordering the modification of the Diva Server is tantamount to an injunction banning the
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`United States sales of the Diva Server in its current state. This relief is contrary to a fair reading of
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`Dynacore. The second problem is one of practicalities. Brooktrout has not shown that its proposals
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`are technologically and commercially feasible. At the hearing on the injunction, Brooktrout
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`suggested alternative approaches to this issue; however, these untested approaches, coupled with the
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`court’s concern that the injunction would unduly impair many lawful non-infringing uses, counsel
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`the court to reject Brooktrout’s request for an order requiring Eicon to modify its Diva Server so that
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`end purchasers cannot use the card to complete infringing systems.
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`In filings made after the injunction hearing, Brooktrout requests the opportunity to engage
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`in further discovery on the modification issue. Brooktrout seeks Eicon’s source code to demonstrate
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`See Brooktrout’s Supplemental Brief in Support of its Motion for a Permanent
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`Injunction and Conditional Motion to Compel Diva Server Source Code (#189).
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`the feasibility of its proposed modifications. The court rejects this request. Primarily, the court is
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`persuaded that the injunction it will issue is sufficient to stop the threat of the defendants’ future
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`unlawful conduct. It must be remembered that the mere sale of the Diva Server in its current form,
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`without any encouragement to infringe the patents, does not constitute unlawful conduct. Thus,
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`injunctive relief, narrowly crafted to stop encouragement, while avoiding undue interference with
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`lawful conduct, is appropriate. As a secondary matter, it is simply too late in the case to re-open
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`discovery on this issue. The feasibility of modifications has been an issue for some time in this
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`litigation. See Deposition of Simon Capper, taken September 14, 2004. Even if the court were
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`persuaded it should order a modification of this product, the court is not convinced that the request
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`for discovery is timely. It is therefore denied.
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`The court has fully considered the impact of the Supreme Court’s recent decision in Metro-
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`Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 125 S.Ct. 2764 (2005). That case dealt with liability
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`for copyright infringement arising from the distribution of peer-to-peer file sharing software. The
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`software did not infringe any copyright. It was a thieves tool used by those engaged in the enterprise
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`of file-swapping. The lower courts had held that the defendants were not subject to vicarious
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`liability for copyright infringement and granted summary judgment. The Court reversed. The Court
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`held that one who distributes a device with the object of promoting its use to infringe copyright, as
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`shown by clear expression or other affirmative steps taken to foster infringement, is liable for the
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`resulting acts of infringement by third parties. The Court held that to the extent the lower courts had
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`relied on Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) to mandate
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`their holdings, the courts had misapprehended that rule. In reaching its decision, the court viewed
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`the totality of the evidence in the case, which included the defendants’ marketing activities, their
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`customer base, and the extent to which users of the software relied on it to engage in wholesale
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`appropriation of protected works. That evidence warranted a finding that the defendants’ conduct
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`went beyond the mere sale of an article capable of both illicit and lawful uses. Metro-Goldwyn-
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`Mayer thus addressed liability for indirect copyright infringement, not the scope of injunctive relief
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`following trial on the merits. Of course, a district court would be justified in fashioning broad
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`injunctive relief on liability facts similar to those present in Metro-Goldwyn-Mayer. But nothing in
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`Metro-Goldwyn-Mayer mandates an injunction prohibiting the future sales of product following any
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`finding of induced infringement.
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`At the hearing, Brooktrout urged that an injunction awarded in a patent case must provide
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`the patentee with meaningful relief. Indeed, the Federal Circuit has held that a court granting an
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`injunction may “not properly deny the one element of such relief that would be necessary to make
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`it effective.” Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc., 750 F.2d 1552, 1564 (Fed. Cir.
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`1984); Kaspar Wire Works, Inc. v. K-Jack Engineering Co., 70 F.3d 129 (Fed. Cir.
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`1995)(unpublished). The question of meaningful remedial relief, however, must be considered in
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`light of the liability facts proven at trial as well as the extent to which the court concludes that the
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`scope of the requested relief will impair lawful activity. There is also a place in the equation for the
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`court to consider the product at issue and how it relates to the patent claims asserted in the case.
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`Finally, contrary to Brooktrout’s suggestions, the jury’s findings as to the extent of infringement are
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`pertinent to this issue. Here, the jury awarded damages in the amount of $94,500 in the context of
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`a claim which originally exceeded $2,000,000. That same jury rejected Brooktrout’s arguments that
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`the infringement was willful. The court has considered these findings when fashioning the scope
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`of the injunction in this case. Nothing in this order would preclude Brooktrout from pursuing others,
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`such as any developers of fax application software, who actively aid or abet infringing activity. In
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`the end, however, Brooktrout’s request goes beyond what the court believes is necessary to deter
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`future unlawful conduct, and the proposed order has a significant impact on lawful activity. The
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`court will not issue it.
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`D.
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`Conclusion.
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`After carefully considering the parties’ arguments, the court is persuaded that Brooktrout is
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`entitled to that portion of its requested injunction which enjoins Eicon from “inducing infringement
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`of United States Patent Nos. 5,291,546 and 5,488,651 by encouraging, supporting, aiding, or abetting
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`the use of the Eicon Diva Server in a fax server for the inbound routing of faxes based on dialed
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`telephone numbers.” Brooktrout is also entitled to injunctive relief banning Eicon’s future sales of
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`its Diva Server card to the five specific customers proven at trial. Brooktrout is further entitled to
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`an injunction prohibiting Eicon from engaging in the specific activities proven at trial to constitute
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`inducement of infringement. The court will therefore enjoin Eicon from publishing any document
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`to be distributed in the United States which contains any instructions to users explaining how to
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`configure the Eicon Diva Server in a manner which enables the user to use the Diva Server to route
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`inbound facsimile transmissions onto computer networks using DID. In this regard, the court will
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`also enjoin Eicon from publishing any such document on any website accessible from any location
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`within the United States. Eicon will also be ordered to publish warnings on its Diva Server product
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`which are displayed to the user that the use of the Diva Server to route inbound facsimile
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`transmissions using DID is likely to infringe certain claims of the patents in suit. C.R. Bard, Inc. v.
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`United States Surgical Corp., 258 F. Supp.2d 355, 364 (D. Del. 2003)(ordering warnings to user of
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`product). Eicon will also be ordered to publish these warnings in a prominent location on any user’s
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`manual distributed with any Diva Server sold into the United States. Finally, the court will enjoin
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`Eicon from assisting in or supporting the development of any application software sold in the United
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`States which enables the Diva Server card to be used for the inbound routing of facsimile
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`transmissions onto computer networks using DID. These restrictions are sufficient to guard against
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`the threat of future unlawful conduct.
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