Case 6:10-cv-00111-LED Document 619

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION PARALLEL NETWORKS, LLC Plaintiff vs. ABERCROMBIE & FITCH, ET AL. Defendants

CASE NO. 6:10cv111 PATENT CASE

ORDER Before the Court is Parallel Networks, Inc.s Motion To Alter Or Amend This Courts Summary Judgment Order Under Rule 59(e), F.R.C.P. (Doc. No. 592, MOTION). The Court held a hearing on November 29, 2011, and DENIED Parallels motion. The Court now memorializes the basis for its decision. BACKGROUND Plaintiff Parallel Networks, LLC (Parallel) originally brought this case as four separate actions, naming over 100 defendants, and alleging infringement of United States Patent No. 6,446,111 (the 111 Patent) in all four cases. On March 1, 2011, the Court held a status conference in all four cases to discuss the most efficient manner in which to handle this case with this many defendants. Defendants suggested that three claim terms would be case dispositive for nearly all Defendants and requested an early claim construction and summary judgment hearing on these terms. Parallel acknowledged that certain terms would be important to its infringement case. Believing that construing these three limited terms early in the case could resolve several important

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issues, the Court set this case for an early Markman and summary judgment hearing. On August 12, 2011, the Court issued its Markman opinion construing the three limited terms. (Doc. No. 566, CLAIM CONSTRUCTION ORDER). Based on those constructions, the Court granted summary judgment of non-infringement to 99 of 112 Defendants. Id. at 1617. Parallel then moved the Court pursuant to F.R.C.P. 59(e) to vacate its order granting summary judgment in favor of 45 Defendants that had previously been granted summary judgment. MOTION at 1. The Court held a hearing on the motion and subsequently denied the motion. ANALYSIS Federal Rule of Civil Procedure 59(e) allows a party to file a motion to alter or amend a judgment of the Court. FED.R.CIV.P. 59(e). For Rule 59(e) to be applicable, the movant must demonstrate either that: (1) there has been an intervening change in controlling law; (2) that there is new evidence available that was not previously available; or (3) there is a need to correct a clear error of law or to prevent a manifest injustice. In re Benjamin Moore & Co., 318 F.3d 626, 629 (5th Cir. 2002). Parallel contends that each of the three Rule 59(e) motion factors independently support its motion. MOTION at 8. Parallel first contends that the Courts Claim Construction Order was an intervening change in the law of the case. Id. Specifically, Parallel asserts that the Courts construction of the term [applet] dynamically generated by the server in response to the request was unanticipated and contrary to all partys proposals to the extent that it included a single transmission limitation. Id. Building on its first point, Parallel next contends that as a result of the unexpected single transmission limitation, there is new evidence available by way of Parallels amended infringement contentions that satisfy the Courts new constructions. Id. at 89. Parallel

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last contends that under Patent Rule 3-6(a), a patentee is ordinarily provided 30 days to amend its infringement contentions to respond to unexpected claim constructions by the Court, however, because of the unique procedures implemented in this case, it has been denied its right to amend. Id. at 910. Therefore, Parallel contends that to prevent a manifest injustice, it should be allowed to amend its infringement contentions pursuant to P.R. 3-6(a) and, in turn, the Court should vacate its summary judgment order in response to the amended contentions. Id. The underlying basis of Parallels contentions regarding all three Rule 59(e) factors is whether the Court adopted an unexpected single transmission limitation into its construction of the term, [applet] dynamically generated by the server in response to the request. As an initial matter, the Court notes that it adopted, verbatim, Defendants proposed construction for [applet] dynamically generated by the server in response to the request. See CLAIM CONSTRUCTION ORDER at 711. The Court further notes that no where in its construction did it adopt a single transmission limitation. The Courts Order did characterize one of the parties contentions in terms of a single transmission, however, this is later clarified to be a consideration of whether the claimed applet is constructed at the time of the request by combining the necessary functionality and data and whether the applet must be transferred in one package. Id. at 7. Put simply, the expression single transmission was merely used as a short-hand way of expressing that an applet has (or does not have), as the Courts construction says, the requisite functionality combined with the necessary data at the server. Further, in the context of summary judgment and based on the Courts construction, the Court was required to determine whether the Defendants accused instrumentalities generate an

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applet that combines the requisite functionality with the necessary data at the server. Id. at 14. The Court considered as probative evidence the functionality and data in the accused instrumentalities and whether they are transferred as a package (i.e. in a single transmission) or separately (i.e. in multiple transmissions paired to multiple, respective requests). Id. at 1516. The Court found that there was no genuine issue of fact that the relevant accused instrumentalities had only a link combined with the data and a separate request must be made for access to the requisite functionality. Id. at 16. In other words, the Court found that the requirement that the applet be generated by combining the requisite functionality with the necessary data at the server was absent from the accused instrumentalities. Id. The evidence of an absence of a single transmission was and is merely an indicia of non-infringement. Id. Nonetheless, even if the Court had adopted a single transmission limitation into its construction, Parallels feigned surprise is, at best, disingenuous. Parallel titled an entire section and expended two pages of its reply in support of its opening claim construction discussing the reason why [d]efendants have no support for their single transmission argument. Doc. No. 526 at 1315. Parallel cannot now plausibly argue that the Court invented the concept of a single transmission out of whole cloth. While Parallel has every right to disagree with the Courts construction on appeal, it should not be allowed to twist the Courts construction in a transparent attempt to shift to a new infringement theory because of that disagreement. The Court did not adopt a single transmission limitation into the construction of [applet] dynamically generated by the server in response to the request. Therefore, there has been no intervening change in controlling law. As a result, the Court also rejects Parallels argument that there is new evidence not previously available via its amended infringement contentions to address

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the Courts unexpected claim construction. Also, because the Courts claim construction was hardly unanticipated, P.R. 3-6(a) is inapplicable. CONCLUSION Based on the foregoing, the Court DENIES Parallels 59(e) motion (Doc. No. 592). Parallel has represented to the Court that it prefers that all the Defendants that have been granted summary judgment be severed into a separate case, have their counterclaims dismissed without prejudice, and final judgment be entered to allow for an immediate appeal. Doc. No. 614 at 34. The Court agrees that this is the best approach. The parties indicated at the hearing that they will provide the Court with a final list of Defendants, by next week, listing the Defendants that should be severed and granted final judgment. At that time, the Court will sever those Defendants and enter final judgment. Further, to avoid a piecemeal litigation, the Court will stay the remaining Defendants that have not been granted summary judgment until either Parallel indicates its desire to not appeal the Courts constructions or the Court of Appeals for the Federal Circuit renders its decision regarding Parallels appeal. The Court also GRANTS Parallels Motion For Leave To Amend Infringement Contentions For Disney Online (Doc. No. 401). Given the pending stay in this case, Disney Online will suffer no prejudice from Parallel amending its infringement contentions to add the new Disney websites. So ORDERED and SIGNED this 5th day of December, 2011.

__________________________________ LEONARD DAVIS UNITED STATES DISTRICT JUDGE 5