Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 1 of 11 PageID #: 19150
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`AGIS SOFTWARE DEVELOPMENT LLC,
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` Plaintiff,
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`v.
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`HUAWEI DEVICE USA INC., et al.,
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` Defendants.
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`AGIS SOFTWARE DEVELOPMENT LLC,
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` Plaintiff,
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`v.
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`APPLE INC.,
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` Defendant.
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`§
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`§
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`Civil Action No. 2:17-CV-513-JRG
`(LEAD CASE)
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`Civil Action No. 2:17-CV-516-JRG
`(CONSOLIDATED CASE)
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`REPLY IN SUPPORT OF DEFENDANT APPLE INC.’S MOTION FOR SUMMARY
`JUDGMENT OF NO DAMAGES FOR FOREIGN USES (DKT. 230)
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 2 of 11 PageID #: 19151
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`TABLE OF CONTENTS
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`Pages
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`INTRODUCTION ...............................................................................................................1
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`ARGUMENT .......................................................................................................................2
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`A.
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`B.
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`C.
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`The Asserted Claims Require User Devices (Not Only Servers) ............................2
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`Foreign Use Of The Accused Apps Cannot Infringe The Asserted Method
`Claims Because At Least Some Steps Would Be Performed Outside The
`U.S. ..........................................................................................................................3
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`Foreign Use Of The Accused Apps Cannot Infringe The Asserted System
`Claims Because Control/Beneficial Use Of The System Invoked By Using
`The Accused Apps Is Exercised/Obtained Outside the U.S. ...................................4
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`I.
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`II.
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 3 of 11 PageID #: 19152
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`Cases
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`TABLE OF AUTHORITIES
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`Pages
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`Centillion Data Sys., LLC v. Qwest Communications Int’l,
`631 F. 3d 1279 (Fed. Cir. 2011).......................................................................................... 5
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`Decca Ltd. v. United States,
`544 F.2d 1070 (Ct. Cl. 1976) .............................................................................................. 5
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`NTP, Inc. v. Research In Motion, Ltd.,
`418 F.3d 1282 (Fed. Cir. 2005).................................................................................. passim
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`WesternGeco LLC v. ION Geophysical Corp.,
`138 S. Ct. 2129 (2018) ........................................................................................................ 5
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`Statutes
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`35 U.S.C. § 1498 ............................................................................................................................. 5
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`35 U.S.C. § 271(a) .......................................................................................................................... 5
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`35 U.S.C. § 271(b) .......................................................................................................................... 5
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`35 U.S.C. § 271(f)(2) ...................................................................................................................... 5
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`ii
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 4 of 11 PageID #: 19153
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`TABLE OF EXHIBITS
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`Exhibit Number
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`Description
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`Appendix A
`Ex. 1
`Ex. 2
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`Dkt. No. 32
`Dkt. No. 230
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`Dkt. No. 230, Mot.,
`Ex. 1
`Dkt. No. 230, Mot.,
`Ex. 2
`Dkt. No. 230, Mot.,
`Ex. 4
`Dkt. No. 230, Mot.,
`Ex. 7
`Dkt. No. 256
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`Independent Claims of ’829 Patent With Emphasis
`McAlexander Opening Expert Report, Attachment E (’829 patent)
`Rebuttal (Non-Infringement) Report of Paul C. Clark (“Clark Rebut.
`Rep.”)
`AGIS’s First Amended Complaint (“Am. Compl.”)
`Apple’s Motion For Summary Judgment Of No Infringement And No
`Damages For Foreign Uses (“Mot.”)
`Damages Expert Report of Alan Ratliff (“Ratliff Rep.”)
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`Deposition of Alan Ratliff, Dec. 7, 2018 (“Ratliff Tr.”)
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`Infringement Expert Report of Joseph McAlexander (“McAlexander
`Rep.”)
`Deposition of Joseph McAlexander, Dec. 7, 2018 (“McAlexander Tr.”)
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`AGIS’s Opposition to Apple’s Motion For Summary Judgment Of No
`Infringement And No Damages For Foreign Uses (“Opp.”)
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 5 of 11 PageID #: 19154
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`I.
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`INTRODUCTION
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`Plaintiff AGIS Software Development LLC (“AGIS”) alleges infringement of U.S. Patent
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`No. 9,749,829 (the “’829 patent”) based on the use of certain applications (the “Accused Apps”)
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`that run on Apple’s iPhone, iPad, and other user devices. See Dkt. 32 [Am. Compl.]. AGIS claims
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`damages based on foreign uses of the Accused Apps. Dkt. 230 [Apple’s Motion for Summary
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`Judgement (“Mot.”)],
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`1 To operate, the Accused Apps use multiple components, including (1)
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`user devices on which the apps run and (2) servers that send and receive data to and from the user
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`devices. See Mot., Ex. 4 [McAlexander Rep.] ¶ 283. For foreign uses, those user devices (and at
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`least some of the servers) are located outside the United States. Mot. at 6-9.
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`AGIS seems to argue that to prove infringement it is sufficient to show that extraterritorial
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`use of the Accused Apps may invoke servers within the United States. But that is not the law. To
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`show infringement of a method claim, AGIS must show that “each of the steps” of the claimed
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`method is performed in the United States. NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282,
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`1318 (Fed. Cir. 2005). To show infringement of a system claim, AGIS must show that “the place
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`where control of the system is exercised and beneficial use of the system [is] obtained” is within
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`the United States. Id. at 1317. The asserted claims are directed to multicomponent methods and
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`systems that include both user devices and servers. Under AGIS’s foreign use theory, at least
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`some of the limitations of the asserted claims would have to be met by user devices located outside
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`1 All emphasis has been added unless otherwise stated.
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 6 of 11 PageID #: 19155
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`the United States. That precludes a finding of infringement for the reasons below.2
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`II.
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`ARGUMENT
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`Apple’s motion can be resolved by answering three simple questions:
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`1.
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`Do the asserted claims of the ’829 patent require user devices—e.g., mobile
`phones—to perform any steps of the asserted method claims or to meet any
`limitations of the asserted system claims?
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`If the answer to the first question is “yes”:
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`2.
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`3.
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`For the asserted method claims, would any steps of the claimed methods be
`performed outside the United States when the Accused Apps are used with devices
`located outside the United States?
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`For the asserted system claims, is the system as a whole put into service outside the
`United States when the Accused Apps are used with devices located outside the
`United States?
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`Because the answer to all three questions is “yes,” foreign uses of the Accused Apps—
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`even if they may invoke U.S. servers—do not infringe any of the asserted claims.3
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`A.
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`The Asserted Claims Require User Devices (Not Only Servers)
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`Each of the four independent claims of the ’829 patent (on which all asserted claims
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`depend) is directed to a multicomponent system or method that includes a “second device” (in
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`addition to servers). Mot. at 2-4; Dkt. 256 [AGIS Opposition (“Opp.”)] at 4. Method claim 1 and
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`system claim 34 each requires the “second device” to, among other things, be “configured to
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`present, via a display of the second device, a georeferenced map . . . .” Mot. at 3 n. 3, 4. In other
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`words, to prove infringement, AGIS must show that a second device is configured to present a
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`2 Contrary to AGIS’s argument (Dkt. 256 [AGIS Opposition] at 1), Apple does not dispute that
`some of the servers invoked by the Accused Apps are located within the United States. Instead,
`Apple’s position is that under AGIS’s foreign use theory, many of the limitations of each claim
`would be met by user devices or servers located outside the United States.
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` 3
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` AGIS conflates the asserted system and method claims, which have different standards for
`infringement, as described below. See NTP, 418 F.3d at 1316.
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 7 of 11 PageID #: 19156
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`map on its display. Similarly, method claim 35 and system claim 68 each requires the “second
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`device” to, among other things, “receiv[e] a request to join a group,” “send[] an indication of
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`acceptance of the request,” “present[], via a display of the second device, a georeferenced map . .
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`. ,” and “identify[] user interaction with the display . . . .” Mot. at 4 n. 5, 6. In other words, to
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`prove infringement, AGIS must show that a second device receives a request to join a group, sends
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`an indication that it has accepted the request, presents a map on its display, and identifies user
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`interaction with the display. Appendix A shows each independent claim with various limitations
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`directed to the “second device” emphasized.4 For each claim, AGIS identifies a user device—e.g.,
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`an iPhone or iPad—operated by a user at the user’s location as the alleged “second device.” See
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`Ex. 1 [Excerpts showing alleged “second device” from McAlexander Opening Expert Report,
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`Attachment E (’829 patent)] at E-1, E-a8, E-a62, E-a76, E-a153 – E-a154, E-a166, E-a173, E-a177
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`– E-a178, E-a186, E-a190, E-a201, E-a203, E-a213, E-a219, E-a232, E-a238, E-a247, E-a250.
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`B.
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`Foreign Use Of The Accused Apps Cannot Infringe The Asserted Method
`Claims Because At Least Some Steps Would Be Performed Outside The U.S.
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`For each asserted method claim, AGIS asserts that the “second device” is a user device,
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`such as an iPhone or iPad. See supra. For foreign uses of the Accused Apps, the alleged second
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`device is located outside the United States. “[A] process cannot be used ‘within’ the United States
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`as required by section 271(a) unless each of the steps is performed within this country.” NTP, Inc.
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`v. Research In Motion, Ltd., 418 F.3d 1282, 1318 (Fed. Cir. 2005). Because the steps performed
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`by the alleged “second device” are performed outside the United States, “each of the [claimed]
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`steps” is not “performed within this country.” Therefore, foreign uses of the Accused Apps cannot
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`4 Apple’s motion focuses on the limitations directed to a “second device.” The asserted claims
`also require a “first device,” which, in the case of foreign uses, is similarly a user device located
`outside the United States. Foreign uses do not infringe for this additional independent reason.
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`infringe the asserted method claims as a matter of law.5
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`C.
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`Foreign Use Of The Accused Apps Cannot Infringe The Asserted System
`Claims Because Control/Beneficial Use Of The System Invoked By Using The
`Accused Apps Is Exercised/Obtained Outside the U.S.
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`The Accused Apps operate using a multicomponent system that includes both user devices
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`and servers. In a multicomponent system, “use” of the system occurs at the “place at which the
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`system as a whole is put into service . . . .” NTP, 418 F.3d at 1317. The system as a whole is put
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`into service “where control of the system is exercised and beneficial use of the system [is]
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`obtained.” Id.
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`AGIS’s infringement claims are predicated on a user using the Accused Apps on a user
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`device, such as a mobile phone, at the user’s location. Without a user invoking the Accused Apps
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`via a user device, the servers do nothing.
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`material fact that under AGIS’s foreign use theory—where users use the Accused Apps on devices
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` Accordingly, there can be no dispute of
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`5
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` It is AGIS’s burden
`to prove infringement and it must support its allegations with facts. AGIS’s experts cite no
`evidence demonstrating that each of the servers invoked by the Accused Apps is an Apple server
`located within the United States.
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 9 of 11 PageID #: 19158
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`outside the United States—control of the system is exercised and beneficial use of the system is
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`obtained outside the United States. Therefore, foreign uses of the Accused Apps do not infringe
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`the asserted system claims under NTP.
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`AGIS’s reliance on Decca Ltd. v. United States is misplaced. Decca involved claims
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`against the United States under 35 U.S.C. § 1498 for infringement of a worldwide system for
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`positioning ships and aircraft. Decca Ltd. v. United States, 544 F.2d 1070, 1074 (Ct. Cl. 1976).
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`The Decca court still determined that the place where control is exercised was decisive and found
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`that control of the worldwide system was by the United States, in the United States, despite that
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`certain portions of the system were located outside the United States. Id. (“[T]he location of the
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`whole for purposes of the United States Patent Law is where the ‘master’ station or stations are,
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`which is in the United States . . . .”); see also NTP, 418 F.3d at 1316 (“In reaching its decision, the
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`court [in Decca] found particularly significant ‘the ownership of the equipment by the United
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`States, the control of the equipment from the United States and . . . the actual beneficial use of the
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`system within the United States.’”) (quoting Decca, 544 F.2d at 1083). Unlike Decca, AGIS’s
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`experts readily conceded that control of the system invoked by using the Accused Apps with
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`foreign devices is exercised at the user’s location outside the United States.6
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`6 AGIS also cites Centillion Data Sys., LLC v. Qwest Communications Int’l, 631 F. 3d 1279 (Fed.
`Cir. 2011). Centillion did not expressly address extraterritorial infringement; it addressed the
`“use” of system claims when that use is performed by multiple parties. Id. at 1284-85. In
`Centillion, there was no dispute that the customer users of the system were located in the United
`States. Indeed, Centillion supports Apple insofar as the court found that the user invoking a
`multicomponent system via the user’s personal computer—similar to users invoking the system
`via the user devices here—controlled and obtained benefit from the system. Id. AGIS’s reliance
`on WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129 (2018) is similarly misplaced.
`WesternGeco was limited to lost profits based on the alleged infringement under 35 U.S.C. §
`271(f)(2) for shipping components of a patented invention overseas to be assembled there. Id. at
`2134. AGIS alleges infringement only under 35 U.S.C. §§ 271(a) and (b). See Dkt. 32.
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`5
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 10 of 11 PageID #: 19159
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`Dated: January 11, 2019
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`By: Respectfully submitted:
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`/s/ Melissa R. Smith
`Melissa Richards Smith
`State Bar No. 24001351
`GILLAM & SMITH, LLP
`303 South Washington Ave.
`Marshall, TX 75670
`Tel: (903) 934-8450
`Fax: (903) 934-9257
`melissa@gillamsmithlaw.com
`
`John M. Desmarais
`Paul A. Bondor
`Michael P. Stadnick
`Ameet A. Modi
`Cosmin Maier
`Kerri-Ann Limbeek
`Brian Matty
`Tom BenGera
`Kathryn Bi
`Francesco Silletta
`DESMARAIS LLP
`230 Park Avenue
`New York, NY 10169
`Telephone: (212) 351-3400
`Facsimile: (212) 351-3401
`Email: jdesmarais@desmaraisllp.com
`Email: pbondor@desmaraisllp.com
`Email: mstadnick@desmaraisllp.com
`Email: amodi@desmaraisllp.com
`Email: cmaier@desmaraisllp.com
`Email: klimbeek@desmaraisllp.com
`Email: bmatty@desmaraisllp.com
`Email: tbengera@desmaraisllp.com
`Email: kbi@desmaraisllp.com
`Email: fsilletta@desmaraisllp.com
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`ATTORNEYS FOR DEFENDANT
`APPLE INC.
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`Case 2:17-cv-00513-JRG Document 295 Filed 01/16/19 Page 11 of 11 PageID #: 19160
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that the foregoing document was filed electronically in
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`compliance with Local Rule CV-5(a). Plaintiff’s counsel of record were served with a true and
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`correct copy of the foregoing document by electronic mail on January 11, 2019.
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`/s/ Melissa R. Smith
`Melissa R. Smith
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