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Vivint Inc. v. Alarm.Com

United States District Court, D. Utah, Central Division

December 7, 2018

VIVINT, INC., Plaintiff,
v.
ALARM.COM INC., Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING, IN PART, ALARM.COM'S MOTION TO STAY

          Clark Waddoups United States District Judge.

         Before the court is Defendant Alarm.com Incorporated's Motion to Stay Pending Conclusion of Ex Parte Reexamination Proceedings, (ECF No. 235). On October 30, 2018, and November 5, 2018, the U.S. Patent and Trademark Office issued Final Office Actions in ex parte reexaminations rejecting nine of the seventeen claims asserted in this action as invalid under 35 U.S.C. § 103. Plaintiff Vivint, Inc. has stated that it intends to continue asserting these claims and will pursue appeals of the U.S. Patent and Trademark Office's decisions.

         On November 9, 2018, Alarm.com filed its Motion to Stay. In its Motion, Alarm.com requested that the court grant a stay, either as to the entire case or as to the nine rejected claims. The court heard oral argument on the motion on November 28, 2018. As explained below, the court grants a temporary stay as to the nine rejected claims.

         Legal Background

         Ex Parte Reexamination

         “[E]x parte reexamination is a curative proceeding meant to correct or eliminate erroneously granted patents.” Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1338 (Fed. Cir. 2013). The “reexamination statute” is found at 35 U.S.C. §§ 301-307. “The reexamination statute” authorizes the United States Patent and Trademark Office (USPTO) to “reconsider patents of doubtful validity, and to cancel defectively examined and therefore erroneously granted patents.” Fresenius 721 F.3d at 1338 (internal quotation marks omitted) (citations omitted).

         “When a claim is determined to be invalid in reexamination, the reexamination statute requires the Director of the PTO to cancel a claim that is ‘finally determined to be unpatentable.'” Id. at 1339 (quoting 35 U.S.C. § 307(a)). That statute provides:

In a reexamination proceeding under this chapter, when the time for appeal has expired or any appeal proceeding has terminated, the Director will issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent any proposed amended or new claim determined to be patentable.

35 U.S.C. § 307(a). A patent owner may appeal the USPTO's rejection to the Patent Trial and Appeal Board (PTAB). See 35 U.S.C. § 134(b) (“A patent owner in a reexamination may appeal from the final rejection of any claim by the primary examiner to the Patent Trial and Appeal Board, having once paid the fee for such appeal.”). If the PTAB upholds the USPTO's rejection, a patent owner may appeal to the Federal Circuit. See 35 U.S.C. § 141(b) (“A patent owner who is dissatisfied with the final decision in an appeal of a reexamination to the Patent Trial and Appeal Board under section 134(b) may appeal the Board's decision only to the United States Court of Appeals for the Federal Circuit.”).

         Inter Partes Review

         “In an” inter partes review (IPR), “a third party may seek cancellation of at least one claim based on [35 U.S.C. § 102 or 103] using only prior art patents or printed publications.” Patent Case Management Judicial Guide, Third Edition § 14.2.5.6 (2016). “IPR may be requested by anyone who is not the patent owner, and who has not previously filed a declaratory judgment action challenging the validity of the patent.” Id. “The USPTO will grant IPR if the petition shows a ‘reasonable likelihood' that the petitioner would prevail on at least one claim being challenged.” Id. Relevant here, “IPR is handled by the PTAB . . . and appeals are taken directly to the Federal Circuit.” Id.

         Procedural Background

         Vivint Files Complaint Alleging Alarm.com Infringed Six Patents

         Vivint filed this case on June 2, 2015. (ECF No. 2.) On June 10, 2015, Vivint filed an Amended Complaint. (ECF No. 15.) In its Amended Complaint, Vivint alleged that Alarm.com infringed six patents-[1] the '123 Patent (Am. Compl. ¶ 26, ECF No. 15 at 5); [2] the '513 Patent (Am. Compl. ¶ 33, ECF No. 15 at 8); [3] the '654 Patent (Am. Compl. ¶ 39, ECF No. 15 at 10); [4] the '601 Patent (Am. Compl. ¶ 46, ECF No. 15 at 12); [5] the '727 Patent (Am. Compl. ¶ 53, ECF No. 15 at 14); and [6] the '713 Patent (Am. Compl. ¶ 60, ECF No. 15 at 15). The '601, '654, '123, and '513 patents belong to a family of patents known as the “Sandelman” patents. (See ECF No. 108 at 2.) The '727 patent and the '713 Patent are unrelated to the Sandelman patents. (See ECF No. 108 at 2.)

         Petitions for Inter Partes Review and Motions to Stay

         “Between September 24, 2015, and September 30, 2015, Alarm.com filed eight petitions for inter partes review (“IPR”) with the PTAB . . . .” (ECF No. 40 at 3; see also ECF No. 67 at 13.) Among these, Alarm.com filed a petition for IPR review regarding Patent '513 on September 28, 2015. This petition was designated IPR2015-01997. In this petition, Alarm.com contended that claims 8-21 of the '513 patent were “unpatentable under 35 U.S.C. § 103(a) over the combination of” two prior patents-“Scadaware and Garton.” (IPR2015-01997 Dkt. 13 at 33.)

         On October 1, 2015, Alarm.com filed, in this court, its first Motion to Stay Pending Inter Partes Review. (ECF No. 40.)

         Between October 30, 2015 and November 9, 2015, Alarm.com filed five more petitions for inter partes review with the PTAB. (See ECF No. 67 at 13.) Among these, Alarm.com filed a petition for IPR review regarding Patent '513 on November 2, 2015. This petition was designated IPR2016-00129. In this petition, Alarm.com contended that claims 10-12, 14, 17, and 18 of the '513 patent were unpatentable under 35 U.S.C. § 103(a), arguing that they were “rendered obvious over” two prior patents-“Johnson and Joao.” (IPR2016-0129 Dkt. 13 at 33.)

         On December 15, 2015, Magistrate Judge Wells entered an Order Denying Alarm.com's first Motion to Stay. (ECF No. 53.) Magistrate Judge Wells denied Alarm.com's Motion because, at that time, “it [was] unknown if the PTAB [would] grant [Alarm.com's] IPR petitions for review.” (ECF No. 53 at 5; see also ECF No. 67 (indicating that the earliest date that the PTAB instituted review was March 24, 2016)).)

         On April 7, 2016, the PTAB entered a Decision Denying Institution of Inter Partes Review in IPR2015-01997. (See IPR2015-01997 Dkt. 14.) The PTAB concluded that Alarm.com had “not demonstrated a reasonable likelihood that it would prevail in showing that independent claims 8, 15, and 19-21, or dependent claims 9-14 and 16-18, would have been obvious over the combination of Scadaware and Garton.” (IPR2015-01997 Dkt. 14 at 34.)

         On May 3, 2016, the PTAB entered a Decision Denying Institution of Inter Partes Review in IPR2016-00129. (IPR2016-00129 Dkt. 13.) The PTAB concluded, in part, that Alarm.com had “not demonstrated a reasonable likelihood that it would prevail in showing the unpatentability . . . of any of the challenged claims 10-12, 14, 17, and 18 as rendered obvious over Johnson and Joao.” (IPR2016-00129 Dkt. 13 at 17.)

         According to Alarm.com, “as of May 12, 2016, the PTAB [had] initiated IPR proceedings against five of the [then] six patents-in-suit before this Court . . . .” (ECF No. 60 at 6.) On May 23, 2016, Alarm.com filed, in this court, a Renewed Motion to Stay Pending Inter Partes Review. (ECF No. 60.)

         One day later, on May 24, 2016, Alarm.com filed a third petition for IPR review with the PTAB regarding Patent '513. This petition was designated IPR2016-001091. In this petition, Alarm.com contended that claims 1-13, and 15-21 were unpatentable under 35 U.S.C. § 103(a), arguing that they were “rendered obvious by Shetty in view of the knowledge of a [person of ordinary skill in the art] and Joao.” (See IPR2016-001091 Dkt. 1 at 19.) In this petition, Alarm.com argued:

Shetty taught that users could remotely access and configure a message profile, and it would have been obvious to do so over the Internet. However, Shetty did not explicitly disclose the use of the Internet or a website. Joao, however, disclosed the use of a website in the same field of remote equipment monitoring as Shetty. As Joao taught the use of a website to provide control over its apparatus and to configure notifications, it would have been obvious to use the website of Joao in the system of Shetty, which provided identical remote monitoring functionality. Doing so would have provided the benefit of a user interface that could be accessed from any computing deviceable to access the world-wide web, and would have involved well known web programming techniques.

(IPR2016-001091 Dkt. 1 at 36.) Alarm.com also argued that “claims 8-13 and 15-21 were rendered obvious in view of the knowledge of a POSITA, Shetty, Joao, and Garton.” (IPR2016-001091 Dkt. 1 at 64.)

         On September 12, 2016, Magistrate Judge Wells entered an Order granting Alarm.com's Renewed Motion to Stay Pending Inter Partes Review. (ECF No. 99.)

         On November 23, 2016, the PTAB entered a Decision Denying Institution of Inter Partes Review in IPR2016-001091 (IPR2016-001091 Dkt. 11.) In this decision, the PTAB noted that “the instant Petition represents [Alarm.com's] third petition specifically challenging each of claims 1-21, [of Patent '513, ] each of these claims having been challenged previously in Cases IPR2015-01997 and IPR2016-00129.” (IPR2016-001091 Dkt. 11 at 9 (emphasis in original).) The PTAB agreed with Vivint's argument that Alarm.com used the PTAB's “decisions in the earlier cases as a roadmap for attempts to remedy deficiencies in its earlier petitions.” (IPR2016-001091 Dkt. 11 at 10.) Indeed, the PTAB described Alarm.com's third petition as very likely being “a case of undesirable, incremental petitioning” in which Alarm.com was relying on the PTAB's earlier decisions to “fix[] deficiencies” that the PTAB had previously noted that were “within [Alarm.com's] capacity to avoid in the earlier” petitions. (IPR2016-001091 Dkt. 11 at 12.) More specifically, the PTAB noted that Alarm.com, “[i]n relying on Shetty, Joao, and Britton, ” “appears to be applying new references to replace Scadaware and Johnson, which it relied upon in” the two previously rejected petitions. (IPR2016-001091 Dkt. 11 at 11.)

         The PTAB ultimately exercised its “discretion not to institute review” of Alarm.com's third petition-in large part based on a desire to save its resources. (See IPR2016-001091 Dkt. 11 at 13 (“The Board's resources would be more fairly expended on initial petitions, rather than on follow-on petitions . . . .”); see also (IPR2016-001091 Dkt. 11 at 14 (“For the reasons discussed above, and especially given the limited resources of the Board, we exercise our discretion not to institute review in this proceeding.”) (emphasis added)).)

         “[I]n March and May of” 2017, the PTAB “issued final written decisions for the . . . instituted IPR's.” (ECF No. 108 at 2.) The PTAB “found that all of the challenged claims of the” '727 patent and the '713 patent-the non-Sandelman patents-“were shown to be unpatentable.” (ECF No. 108 at 2-3.) A number of claims for the Sandelman patents were found to also not be patentable. (See ECF No. 106 at 2.) Relevant here is the PTAB's May 2, 2017 Final Written Decision regarding Patent '601. (Final Written Decision (“FWD”) IPR-2016-00116.)

         The PTAB's May 2, 2017 Final Written Decision

         In its Final Written Decision, the PTAB noted that “[t]he '601 patent describes systems and methods for monitoring remote equipment . . . .” (FWD IPR-2016-00116 at 4.) The PTAB further noted that “[a]ccording to the '601 patent, prior art systems were limited . . . .” (FWD IPR-2016-00116 at 4.) “The '601 patent purportedly solve[d] these [limitations] by describing a system for remotely monitoring electrical or mechanical equipment that can deliver fault notification messages to different individuals for different fault conditions via different electronic media, and in which a customer may modify its message profile interactively.” (FWD IPR-2016-00116 at 4-5.) Relevant here, the PTAB also included one of Patent '601's claim limitations: “a method of monitoring remote equipment comprising the step[ ] of . . . enabling a user to remotely configure or modify a user-defined message profile . . . .” (FWD IPR-2016-00116 at 6.)

         In its Final Written Decision, the PTAB also included a section titled “Scope and Content of the Prior Art, ” and included an “Overview of Shetty.” (FWD IPR-2016-00116 at 24.) Shetty is a patent that was issued on September 15, 1998-before the Sandleman patents. (See FWD IPR-2016-00116 at 8.)

Shetty discloses a method for providing information relating to a machine to a user. The method includes the steps of sensing predetermined events relating to the machine, producing corresponding event signals, delivering the event signals to a remote site, comparing the event signals to a profile of events corresponding to the user, and delivering a notification signal to the user if the event signals match the profile. Shetty explains that computers and electronics are becoming increasingly common on many machines. Shetty provides, as an example, that earthmoving machines now include many on-board sensors for recording parameter data during operation, and that on-board controllers also may calculate parameters of the machine based on sensor data. Shetty further explains that, with the large increase in the number of sensors and data being collected, the amount of data to be analyzed becomes unmanageable, and additionally, different persons, for example, the operator, the owner, etc. may have need for different information.

(FWD IPR-2016-00116 at 24 (internal quotation marks and citations omitted).)

         The PTAB also included “Figure 1 of Shetty:” (FWD IPR-2016-00116 at 25.)

         (Image Omitted.)

         “Figure 1 is a block diagram of an apparatus adapted for performing the method provided by Shetty.” (FWD IPR-2016-00116 at 25.) According to the PTAB, “Shetty . . . teaches that user profile database 106 contains information relating to all users, including a user profile that defines which events require that the user be notified.” (FWD IPR-2016-00116 at 26.) According to the PTAB, “[u]ser interface 110 allows a user to access user profile database 106 and input information.” (FWD IPR-2016-00116 at 26.)

         Vivint argued to the PTAB that “Shetty's teaching of accessing user profiles stored in user profile database 106 does not teach or suggest enabling a user to ‘remotely' ‘configure a user-defined message profile.'” (FWD IPR-2016-00116 at 31.) More specifically, Vivint argued that “Shetty is silent as to whether a user may access user profile database 106 from . . . remote work stations via user interface 110.” (FWD IPR-2016-00116 at 39.) Vivint also argued that “Shetty does not teach ...


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