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Sprint Communications Co. L.P. v. Time Warner Cable, Inc.

United States District Court, D. Kansas

May 30, 2017

SPRINT COMMUNICATIONS COMPANY L.P., Plaintiff,
v.
TIME WARNER CABLE, INC., et al., Defendants.

          MEMORANDUM AND ORDER

          John W. Lungstrum United States District Judge.

         This patent infringement case was tried to a jury in this Court from February 13, 2017, through March 3, 2017. By its verdict, the jury found the following: that Time Warner Cable[1] infringed each of the asserted claims of the five Sprint patents at issue; that none of those claims is invalid; that Sprint proved reasonable royalty damages in the amount of $139, 800, 000; and that Time Warner Cable's infringement was willful. By Memorandum and Order of March 14, 2017, the Court issued findings of fact and conclusions of law, by which it rejected Time Warner Cable's equitable defenses and denied Sprint's claim for enhanced damages. See Sprint Communications Co. L.P. v. Time Warner Cable, Inc., 2017 WL 978107 (D. Kan. Mar. 14, 2017) (Lungstrum, J.). Also on March 14, 2017, the Court entered judgment in Sprint's favor in the amount of the jury verdict (plus postjudgment interest and costs).

         This matter presently comes before the Court on Time Warner Cable's posttrial motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(b) (Doc. # 485). For the reasons set forth below, the Court denies the motion.[2]

         This matter also comes before the Court on Sprint's motion for an amendment of the judgment, pursuant to Fed.R.Civ.P. 59, to add an award of prejudgment interest (Doc. # 483). The Court grants the motion in part, and it awards Sprint prejudgment interest in the amount of $6, 183, 548.00. The Court will issue an amended judgment accordingly.

         I. Time Warner Cable's Motion for Judgment as a Matter of Law

         A. Governing Standard

         Judgment as a matter of law under Fed.R.Civ.P. 50(b) is improper “unless the proof is all one way or so overwhelmingly preponderant in favor of the movant as to permit no other rational conclusion.” See Crumpacker v. Kansas Dept. of Human Resources, 474 F.3d 747, 751 (10th Cir. 2007). In determining whether judgment as a matter of law is proper, a court may not weigh the evidence, consider the credibility of witnesses, or substitute its judgment for that of the jury. See Sims v. Great American Life Ins. Co., 469 F.3d 870, 891 (10th Cir. 2006). In essence, a court must affirm a jury verdict if, viewing the record in the light most favorable to the nonmoving party, the record contains evidence upon which the jury could properly return a verdict for the nonmoving party. See Bartee v. Michelin North America, Inc., 374 F.3d 906, 914 (10th Cir. 2004). Conversely, the court must enter judgment as a matter of law in favor of the moving party if “there is no legally sufficient evidentiary basis for a reasonable jury to find for the issue against that party.” See Sims, 469 F.3d at 891.

         B. Damages

         1. Time Warner Cable requests judgment as a matter of law on Sprint's claim for damages. Time Warner Cable renews the “Catch-22” argument that it made in motions at the close of Sprint's case and after the submission of all evidence. The argument proceeds as follows: Sprint presented evidence of a reasonable royalty only through its damages expert, Dr. Mohan Rao. Dr. Rao declined to apportion damages among the patents at issue, based on his assumption (from Sprint's technical expert, Dr. Stephen Wicker) that the patents were “blocking patents, ” meaning that any VoIP-PSTN connection would infringe at least one of Sprint's patents. Thus, Sprint was required to prove the assumption that the patents were blocking patents. If there was no such evidence, then there was no basis for Dr. Rao's royalty opinion, and Sprint's damages claim must fail. If, on the other hand, Sprint's patents were blocking patents, then Time Warner Cable must also have infringed prior to the accused Go-It-Alone system, which was launched in 2010. In that case, in which Time Warner Cable infringed going back as far as 2003, 2010 would not be an appropriate date for the hypothetical license negotiation that informs the royalty determination. Dr. Rao considered only a 2010 hypothetical negotiation; thus, if the use of that date was improper, Dr. Rao would have no royalty opinion. Either way, argues Time Warner Cable, Dr. Rao's royalty opinion lacks support.

         The Court concludes, however, that there is no Catch-22 here as argued by Time Warner Cable. The issue is whether there was sufficient evidence to support Dr. Rao's assumption of blocking patents. In its answer to a special verdict interrogatory, the jury found that Sprint had proved that the appropriate date for the hypothetical negotiation was 2010. The jury had been instructed (in an instruction that Time Warner Cable has not challenged) that “[a] reasonable royalty is the amount of royalty payment that [the parties] would have agreed to in a hypothetical negotiation taking place at a time prior to when the infringing use first began.” As the Court has previously noted, if the prior infringement was by a different product, the date of the hypothetical negotiation date would be at the start of the present infringement and not at the start of the prior infringement. See Sprint Communications Co. L.P. v. Comcast Cable Communications LLC, 2016 WL 7079522, at *14 (D. Kan. Dec. 5, 2016) (Lungstrum, J.) (hereafter Daubert Order) (citing Fujifilm Corp. v. Motorola Mobility LLC, 2015 WL 1265009, at *3 (N.D. Cal. Mar. 19, 2015)). Time Warner Cable has not challenged the jury's finding that 2010 was the appropriate negotiation date. Moreover, that finding is supported by evidence that Time Warner Cable's Go-It-Alone product was a distinct product launched in 2010 that used differed equipment or architecture. Thus, the fact that the jury found 2010 to be the appropriate date for the hypothetical negotiation does not mean that Time Warner Cable's pre-2010 activities did or did not infringe Sprint's patents. Indeed, as the Court noted at trial, there is no competent evidence from which the jury could have made such a determination, as neither party's expert offered such an opinion concerning Time Warner Cable's pre-2010 products. Accordingly, the jury's finding and Dr. Rao's use of a 2010 date does not mean that the patents could not be blocking patents, which in turn means that Sprint's positions are not irreconcilable and there is no Catch-22.

         Addressing the relevant question, the Court concludes that there was evidence presented at trial to support Dr. Rao's assumption that Sprint's patents were blocking patents. As noted above, Dr. Rao relied on Dr. Wicker for that assumption, and Dr. Wicker testified that there were no non-infringing alternatives for Time Warner Cable's system in 2010. Time Warner Cable argues that Dr. Wicker did not testify that there were no non-infringing alternatives, but that he addressed only particular alternatives proposed by Time Warner Cable's experts in discovery. At the conclusion of that testimony, however, Dr. Wicker testified that he did not find any acceptable non-infringing alternatives “in general.” Viewed in the light most favorable to Sprint, the non-moving party, this testimony provides evidence that there were no non-infringing alternatives. Time Warner Cable argues that Dr. Wicker failed to consider Time Warner Cable's pre-2010 systems as alternatives, but Time Warner Cable was free to raise that issue in cross-examining Dr. Wicker or through its own expert, and it did neither. Thus, Dr. Wicker's testimony that there were no non-infringing alternatives stood unrebutted. Moreover, under Time Warner Cable's central argument, those pre-2010 activities also infringed and thus they would not have been non-infringing alternatives.

         Time Warner Cable also argues that the lack of non-infringing alternatives does not mean that the patents were blocking patents as assumed by Dr. Rao. Time Warner Cable argues that the standard for non-infringing alternatives is narrower, in that such alternatives must be available and acceptable. In fact, the jury was instructed (in an instruction not challenged by Time Warner Cable) that it could consider evidence concerning the availability of a non-infringing alternative, which must be an acceptable product (with no mention of availability). A reasonable interpretation of blocking patents as used by Dr. Rao would be that any acceptable product would infringe Sprint's patents. Thus, considered in the light most favorable to Sprint, the evidence was sufficient to allow the jury to find reasonably that Dr. Rao's assumption had been proved and thus to accept Dr. Rao's royalty opinion. The Court therefore denies Time Warner Cable's motion for judgment on this basis.

         2. Time Warner Cable also renews its argument-which the Court has repeatedly rejected-that Dr. Rao's royalty opinion was improper and represented “junk science” because it was based on the verdict in the Vonage case, in which Sprint's damages expert employed a 25-percent rule that the Federal Circuit has since ruled unreliable. As the Court has previously explained, Dr. Rao did not use the 25-percent rule in forming his royalty opinion in this case; in Vonage, the jury heard different damages opinions, and it did not find damages in accord with the opinion of Sprint's damages expert; and the verdict represents a piece of information that the parties might have considered in a hypothetical license negotiation. See, e.g., Daubert Order, 2016 WL 7079522, at *9-10. Time Warner Cable has not provided authority that suggests that the verdict could not be used here. Nor has Time Warner Cable addressed the Court's reasoning in consistently rejecting this argument. Therefore, the Court rejects this argument once again, and it denies the motion for judgment on this basis.

         3. Finally, in a footnote, Time Warner Cable reasserts various failed arguments from its Daubert motion and its motions in limine. Time Warner Cable has not provided any basis for reconsideration of those earlier rulings, however (the footnote is devoid of argument), and therefore the Court summarily denies any such request for relief.

         C. Infringement

         Time Warner Cable moves for judgment as a matter of law on Sprint's claims for patent infringement. The jury found that Time Warner Cable infringed five Sprint patents. Time Warner Cable argues that Sprint failed in its proof with respect to nine particular claim limitations, which the Court addresses in turn.

         1. Time Warner Cable asserts that Sprint failed to prove satisfaction of the “in response to” limitation found in four of the patents. In general, that limitation requires conversion or transfer of a voice communication “in response to” receiving a particular message. Time Warner Cable essentially argues that the conversion or transfer in its system is not “in response to” the receipt of the message because other steps are required after receipt for the conversion or transfer to occur. The Court rejects this argument.

         In its claim construction order, the Court rejected Time Warner Cable's proposed construction that would require the action taken “in response to” something be taken immediately; it noted that the term requires only some concept of causation, not immediacy; and it declined to construe the term. See Sprint Communications Co. L.P. v. Comcast Cable Communications LLC, 2014 WL 5089402, at *25 (D. Kan. Oct. 9, 2014) (Lungstrum, J.) (hereafter Markman Order). Thus, there is no additional limitation requiring that the conversion or transfer be “in response to” the receipt of the message without any intervening steps or without any additional causes. Under the plain meaning of the term, the conversion or transfer could be “in response to” the receipt of the message even if other steps are also required for that conversion or transfer. Dr. Wicker provided specific testimony that this limitation as found in the four patents was satisfied by the accused system, and that testimony must be credited for purposes of this motion and provides a sufficient basis for the jury's verdict.

         2. Time Warner Cable asserts that Sprint failed to prove satisfaction of the “asynchronous communication” term in three patents. In the claim construction process, the Court was not asked to construe this term; and in declining to construe the term “asynchronous communication system, ” the Court noted that the plain meaning of “asynchronous communication” was a communication in which the transmitting and receiving devices do not share a common clock. See Markman Order, 2014 WL 5089402, at *20. At trial, Sprint provided sufficient evidence that this term was satisfied in the accused system, as Dr. Wicker testified that the relevant communications were asynchronous because there was no strict timing relationship in Time Warner Cable's managed IP network.[3]

         Time Warner Cable argues that the communications were not asynchronous because they also passed through the DOCSIS network in Time Warner Cable's system, which network used shared clocks. That argument goes to the weight of Dr. Wicker's opinion only. Time Warner Cable did make that argument at trial, but the jury rejected it by its verdict. The Court cannot conclude as a matter of law that this limitation was not satisfied, as Sprint did provide evidence to the contrary. Accordingly, the Court rejects this argument for judgment as a matter of law.

         3. Time Warner Cable asserts that Sprint failed to prove satisfaction of the “processing . . . to select” limitation in three patents. In its claim construction order, the Court rejected Time Warner Cable's proposed limitation that would have required the processing element actually to make the selection, and it instead construed this term to mean “processing . . . to participate in the selecting.” See Markman Order, 2014 WL 5089402, at *14-15. Time Warner Cable now argues that other elements, not the processing element, actually make the selection of the network code or identifier in the accused system. Time Warner Cable has not explained, however, why the processing element does not participate in the selecting, in accordance with the Court's construction. Sprint offered evidence, in the form of testimony by Dr. Wicker, that this limitation was satisfied in Time Warner Cable's system. Thus, the Court rejects this argument for judgment as a matter of law.[4]

         4. Time Warner Cable asserts that Sprint failed to prove satisfaction of the “interworking unit” limitation found in three patents, which the Court construed to mean an “ATM interworking multiplexer.” See Id. at *15-17. The jury found that the relevant claims were not literally infringed but were infringed under the doctrine of equivalents. The Court instructed the jury with respect to equivalence as follows:

You may find that an element or step is equivalent to a requirement of a claim that is not met literally if a person having ordinary skill in the field of technology of the patent would have considered the differences between them to be “insubstantial” or would have found that the structure or action: (1) performs substantially the same function and (2) works in substantially the same way (3) to achieve substantially the same result as the requirement of the claim.
The known interchangeability of substitutes for an element of a patent claim also is a factor that bears upon whether an accused structure or action is substantially the same as the claimed structure or action. In order for the structure or action to be considered interchangeable, the structure or action must have been known at the time of the alleged ...

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