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Realvirt, LLC v. Lee

United States District Court, E.D. Virginia, Alexandria Division

July 19, 2016

REALVIRT, LLC, Plaintiff,
v.
MICHELLE K. LEE, Defendant.

          MEMORANDUM OPINION

          T. S. Ellis, III United States District Judge.

         In this 35 U.S.C. § 145 action, plaintiff challenges a United States Patent and Trademark Office ("PTO") decision rejecting the patentability of the inventions claimed in U.S. Patent Application Serial No. 07/773, 161 (the " '161 Application"). At issue on the parties' cross-motions for summary judgment and the PTO's motion to dismiss are (i) whether plaintiff has standing to bring a § 145 action, and (ii) if so, whether the inventions claimed in the '161 Application are patentable. As the matter has been fully briefed and argued orally, it is now ripe for disposition.

         I.

         The pertinent facts, derived from the parties' statements of undisputed facts and the Administrative Record ("AR"), may be succinctly summarized.

         Plaintiff Realvirt, LLC, a Delaware Corporation with its office in Massachusetts, is the purported assignee and owner of the § 161 Application. Defendant Michelle K. Lee is the Under Secretary of Commerce for Intellectual Property and the Director of the PTO. Anthony Z. Bono ("Tony Bono") and Joachim C.S. Martillo ("Joachim Martillo") are two of the six declared inventors of the inventions claimed in the '161 Application. Tony Bono and Joachim Martillo purportedly assigned their rights to the '161 Application to plaintiff by virtue of a written document dated February 15, 2013.

         A.

         The '161 Application describes inventions related to a network switching device that connects computers through networks. As the § 161 Application specification explains, bridges and routers are two types of network switching devices. A bridge is "a well known type of network switching device to which multiple branches of a network are connected"; a router, like a bridge, "switch[es data] packets between branches of a network, " but unlike a bridge, "operate[s] at the next higher level of network software, the so-called network layer, and ... providefs] more flexibility and control of the actual route which the packet takes through the network." AR at 5. The specification further explains that because bridges and routers have their own advantages and disadvantages, it is often desirable to configure a network by using a combination of bridges and routers.

         The '161 Application claims a network switching device that is a "software configurable bridge/router." AR at 8. This device provides a "software means" of enabling users to "group [] input/output devices into one or more logical bridges" and to "connect the bridges with one or more logical routers." AR at 7. The specification explains that a user may configure the bridge/router device through a "configuration routine, " as shown in Figure 8. See AR at 177. The configuration routine includes a number of menus that allow a user to select his desired configuration settings, and these settings can be stored in the data structures shown in Figures 9-11. See AR at 173-76 (showing examples of various bridge/router configurations). Once a user enters his desired bridge/router configuration settings and once these settings are stored in data structures, the configuration settings may be implemented on the bridge/router device in one of two ways: (i) a "static" configuration, or (ii) a "dynamic" configuration.[1] When the static configuration method is selected, the bridge/router device is reset, causing an initialization routine to run. The initialization routine "creates the data structures of FIGS. 9-11 in RAM, copies configuration data from NOVRAM into them, [2] and then fills out or update[s] the other fields of those data structures." AR at 9-10. Then "the bridge/router ... prepare[s] to operate as configured by the user in the routine of FIG. 8." Id. By contrast, when the dynamic configuration method is selected, the configuration settings for the bridge/router device are changed while the device is running-that is, without resetting the device.[3]

         The '161 Application includes numerous claims, and the parties agree that all claims in issue (1, 2, 5-16, and 18-39) rise or fall with representative claim 24, incorporating the features of claim 23 ("Claim 24"). Claim 24 describes "[a] network switching device comprising":

(i) "a plurality of input/output devices being configured to communicate packets";
(ii) "a configuration routine that defines one or more logical bridges, wherein each of the one or more logical bridges includes one or more parts that provide one or more connections to a logical bridge, selectively associates each of said input/output devices with a selected one or more of said of [sic] logical bridges, and creates one or more data structures that represent which input/output devices have been associated with each logical bridge";
(iii) "a bridging routine that responds to said one or more data structures by creating said one or more logical bridges with which one or more input/output devices have been associated to operate as one or more separate media access control level bridge including, and having a port for, each of the input/output devices represented as being associated with such logical bridge by said one or more data structures"; and
(iv) "at least one processing unit and associated memory to execute said configuration routine to create said one or more data structures and said bridging routine to operate said one or more separate media access control level bridges";[4]
(v) "at least one routing routine that responds to said one or more data structures representing which logical bridges have been associated with each logical router by causing one or more logical routers with which one or more logical bridges have been associated to operate as a separate network layer router having an interface to each of the logical bridges represented as being associated with such logical router by said one or more data structures."

AR at 3005, Claims Appendix.

         Although Claim 24 purports to recite a novel and non-obvious network switching device, the specification includes a minimal discussion of the hardware needed to build and operate the claimed invention. In this regard, the specification's limited discussion of the hardware used for the network switching reflects the following:

The preferred embodiment of the invention is a computer system having a programmable CPU[5] and the memory necessary to run the software capable of configuring the bridge/router and to operate it once configured. In the preferred embodiment, the CPU and memory are located on a printed circuit mother board. This mother board is designed so that additional printed circuit cards containing I/O devices[6] can be plugged into it. The mother board contains an RS232 port[7] capable of driving a standard terminal, enabling the system to project information about the system's current status and configuration on the screen of the terminal, and allowing the user to enter information to change and control the system on the keyboard of the terminal. In another embodiment, the programmable CPU, memory, multiple I/O devices, and RS232 port are all placed on one printed circuit board designed to fit into a standard computer. Those skilled in the art of computer design will understand that any combination of one or more programmable devices and memory, with more than one I/O device, could be used to create equivalent functionality.

AR at 9. The specification provides no description of an embodiment that allows the network switching device to change configuration settings using a dynamic configuration method.

         B.

         In 1988, Tony Bono and Joachim Martillo, two of the six declared inventors of the inventions claimed in the '161 Application, worked as business partners under the name Constellation Technologies and began developing a new type of network switch ("Constellation network switching device"). AR at 2673. Once developed, the Constellation network switching device would become the basis for the ' 161 Application.

         At some point in 1988, Tony Bono and Joachim Martillo approached Tony Bono's brother, Vincent P. Bono ("Vincent Bono"), about an investment opportunity in Constellation Technologies. At the time, Vincent Bono was the President and majority shareholder of Clearpoint Research Corporation ("Clearpoint"), a company that designed and manufactured memory boards and other components for computer systems. After some discussion, the parties decided that, instead of an investment arrangement, they preferred for Clearpoint to hire Tony Bono and Joachim Martillo so that the two could continue to develop the Constellation network switching device as employees of Clearpoint ("Constellation Project"). Accordingly, on November 1, 1988, Tony Bono and Joachim Martillo entered into a written letter agreement with Clearpoint ("1988 Letter Agreement"). The 1988 Letter Agreement provides that it is "a summary of the agreement we have for you to join Clearpoint and [to] have Clearpoint acquire the rights to the technology and intellectual property of Constellation Technologies." AR at 133.

         Plaintiff contends that the 1988 Letter Agreement was one in a series of agreements related to the Constellation Project ("Constellation Agreements"), and that most of these agreements were oral agreements. According to plaintiff, in one such oral agreement Clearpoint agreed to assign rights related to the Constellation network switching device to Tony Bono and Joachim Martillo upon the occurrence of certain future events ("1988 Oral Agreement").[8]Specifically, plaintiff contends that pursuant to the purported 1988 Oral Agreement, Clearpoint agreed to assign its rights related to the Constellation network switching device to Tony Bono and Joachim Martillo in the event (i) that Tony Bono and Joachim Martillo finished developing the Constellation network switching device while employed by Clearpoint, and (ii) that Clearpoint cancelled the Constellation Project or parted ways with Tony Bono and Joachim Martillo.

         The Constellation network switching device was developed at some point while Tony Bono and Joachim Martillo were employed by Clearpoint, and on October 8, 1991, Tony Bono, Joachim Martillo, and the other four declared inventors filed the '161 Application. At that time, the ' 161 Application included only two claims; these two original claims were later amended.

         Shortly thereafter, by written document executed in March 1992, each of the six declared inventors of the inventions described in the '161 Application, including Tony Bono and Joachim Martillo, assigned his "entire right, title and interest in, to and under [the '161 Application]" to Clearpoint "for good and valuable consideration from Clearpoint" ("1992 Assignment"). AR at 95-96.

         Thereafter, on January 7, 1993, the PTO mailed an Office Action including a Non-Final Rejection of the claims of the '161 Application. That same month, Clearpoint fired all of its employees, including Tony Bono and Joachim Martillo. Thereafter, on August 11, 1993, the PTO issued a Notice of Abandonment on the ground that the applicants had failed to file a timely response to the January 7, 1993 Office Action.

         On July 29, 1993, Clearpoint and Penril Datacomm Networks, Inc. ("Penril") entered into a Purchase Agreement ("1993 Penril Purchase Agreement"), which provides that "[Clearpoint] hereby sells, assigns, conveys, transfers and delivers to [Penril], and [Penril] hereby purchases and acquires the Assets, including all of [Clearpoint's] right, title and interest therein and thereto free and clear of any liens, pledges, security interests, claims or encumbrances of any kind." Def. Ex. G., 1993 Penril Purchase Agreement, at 4. The "Assets" Clearpoint assigned to Penril include, inter alia, "[a]ll patents, patent rights, ... [and] applications for patents ... relating to the Software and the Hardware Designs." Id. at 2. The 1993 Penril Purchase Agreement further reflects (i) that "[Clearpoint] is the true and lawful owner of the Assets and has full power and right to sell, assign and transfer to [Penril] all of its rights, title and interest in and to the Assets"; (ii) that "[Clearpoint] owns the patents ... existing or pending, listed in Exhibit 4 hereto, " namely the '161 Application; (iii) that "there are no agreements or arrangements between [Clearpoint] and any third person which would have any effect upon Seller's title to and other rights respecting the Assets, " id. at 8; (iv) that "no third party has any interest of any kind in any of the Assets, " except for "such interest or right, if any, as is described in E ...


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