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Limelight Networks, Inc. v. XO Communications, LLC

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

March 23, 2018

LIMELIGHT NETWORKS, INC., Plaintiff,
v.
XO COMMUNICATIONS, LLC and AKAMAI TECHNOLOGIES INC., Defendants.

          OPINION

          John A. Gibney, Jr., United States District Judge

         The Court now addresses three lingering pretrial issues before the jury trial set to begin on April 2, 2018. First, defendant Akamai has moved for summary judgment dismissing claims relating to the '155 Patent. Second, the Court previously excluded Limelight's expert from testifying about reasonable royalty damages and granted Limelight leave to file a proffer on other evidence in the record to support such damages. Akamai has moved to strike the proffer. Finally, Akamai moved the Court to reconsider its claim construction of the '002 Patent's "neighboring server" term.

         For the reasons stated below, the Court grants the motion for summary judgment because the undisputed evidence shows that Akamai does not infringe on Limelight's '155 Patent. The Court also grants the motion to strike Limelight's royalty damages proffer because Limelight does not provide a reliable damages theory to present to the jury. Finally, the Court grants the motion to reconsider because it misunderstood the parties' prior arguments about the proper construction of the '002 Patent.

         I. AKAMAI DOES NOT INFRINGE ON LIMELIGHT'S '155 PATENT

         A court should grant summary judgment on patent non-infringement if the undisputed evidence shows that the accused product does not incorporate every limitation of a claim in an asserted patent, either literally or under the doctrine of equivalents.[1] Fellowes, Inc. v. Michilin Prosperity Co., 491 F.Supp.2d 571, 584 (E.D. Va. 2007) (citing Micro Strategy, Inc. v. Business Objects, S.A., 429 F.3d 1344, 1352 (Fed. Cir. 2005)). If even one claim limitation is missing or not met, there is no infringement. Id. "A finding of infringement under the doctrine of equivalents requires a showing that the difference between the claimed invention and the accused product or method was insubstantial or that the accused product or method performs the substantially same function in substantially the same way with substantially the same result as each claim limitation of the patented product or method." Id. (quoting Aqua Tex Indus., Inc. v. Techniche Solutions, 479 F.3d 1320, 1326 (Fed. Cir. 2007)).

         As the Court previously held, the '155 Patent Claim 1 teaches a method where a server receives:

a request for content and the system determines certain network parameters related to performance. Next, the system determines one or more first values of attributes on the network based on the parameters of the network. The system then modifies a second set of values to result in the determined first values. Then "the second values of the attributes" thereafter influence processing and memory capabilities.

(Jan. 19, 2018 Opinion, Dk. No. 547.) Importantly, "second values" means the original (non-modified) values of the attributes for the first connection, and these non-modified second values influence "processing or memory capabilities of the part or all of the system supporting the first connection."[2] ('155 Patent, Claim 1.) As stated in the Court's previous Opinion, Limelight points to record evidence that Akamai's system "retains and later uses the original values of the 'second values' even after the second values have been modified." (Almeroth Decl., Dk. No. 536-37, at ¶ 20.) The Court directed the parties to brief the issue of whether Akamai uses the retained values to "influence memory and processing" as required by Limelight's '155 Patent.

         The only area in which Limelight claims that Akamai uses retained, non-modified values to thereafter influence processing and memory capabilities occurs not on the first connection as required by the '155 Patent, but instead when Akamai uses non-modified default values to influence processing and memory "whenever there is a new connection." (Limelight's Supplemental Brief at 2, Dk. No. 565.) At the hearing held on March 23, 2018, Limelight pointed to slides 79 through 81 to try to prove that Akamai's system uses the default values over the same connection, but none of the slides actually show that to be true. The fact that Akamai's system retains non-modified values as defaults to influence memory and processing over new connections does not infringe on the ' 155 Patent's claim that teaches a method that uses the non-modified values to influence memory and processing capabilities of the first connection. This is Limelight's only infringement theory, and the undisputed evidence does not show that Akamai's system meets all of the limitations within the '155 Patent in light of the Court's claim construction. The Court therefore dismisses Limelight's infringement claims related to the '155 Patent.

         II. AKAMAI'S MOTION TO STRIKE LIMELIGHT'S DAMAGES PROFFER

         At a hearing on December 1, 2017, the Court indicated that it would exclude Dr. Prowse's testimony related to royalty damages for Limelight's '155 and '002 Patents but permitted Limelight to proffer other evidence to support its damages claims. Limelight has done so, and Akamai moved to strike the proffer. The Court addresses the motion only as to the '002 Patent, as the Court has dismissed the claims related to the '155 Patent. The Court will not address Akamai's Rule 26 arguments on this issue because Limelight fails on the merits to establish a damages theory which it can present to a jury.

         In its Daubert opinion, the Court previously excluded Prowse's reasonable royalty analysis for the '002 Patent because he failed to apportion the 8% royalty rate to Akamai's revenues tied specifically to the '002 Patent. Instead, Prowse looked to the fact that Akamai paid a competitor-Cotendo-a 15% royalty on all of its technology (based on Cotendo's revenues) at the time it acquired Cotendo. Prowse determined that the comparable technology in that transaction accounted for 59% of Cotendo's worth, and calculated an effective 8.9% royalty paid on the comparable technology in that transaction. Prowse then lowered that to 8% based on the Georgia Pacific factors and applied it to Akamai's full revenues. The Court rejected this methodology because Prowse did not apportion the royalty base (meaning the percentage of Akamai's revenues tied to the technology) but instead sought to apportion the royalty rate based on a comparable technology's incremental value to a separate company. The Court found that reverse engineering a royalty rate based on a patent's importance to one company did not adequately apportion the value of that technology in a way that would allow Prowse to apply that rate to Akamai's entire revenues without further apportioning the royalty base.

         Limelight now seeks to apply Prowse's 8% rate to an apportioned royalty base. Limelight plans to present evidence that Akamai's system results in a cache miss at the initial edge server approximately 50% of the time and that almost all of Akamai's customers use the accused Ping Likely Peers feature. Limelight essentially argues that the accused system uses the patented feature for 45% of its traffic and that 45% of Akamai's overall revenues therefore represent a reasonable royalty base against which it can apply the 8% royalty.

         "While any reasonable royalty analysis 'necessarily involves an element of approximation and uncertainty, a trier of fact must have some factual basis for a determination of a reasonable royalty.'" Finjan, Inc. v. Blue Coat Sys., Inc.,879 F.3d 1299, 1312 (Fed. Cir. 2018) (citation omitted). That said, a court "must award damages in an amount no less than a reasonably royalty" when infringement is found. Id. (finding that the plaintiff did not support their damages theory on which the jury determined damages but remanding to the district court to determine whether the plaintiff could establish damages under a different theory) (citation omitted). At the end of the day, "[a] reasonable royalty analysis requires that the 'trial court. .. carefully tie proof of damages to the claimed invention's foot in the market place.'" Exmark Mfg. Co. ...


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