Ncube Corporation v. Seachange International Inc. , 732 F.3d 1346 ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
NCUBE CORPORATION (now known as ARRIS
Group, Inc.),
Plaintiff-Appellant,
v.
SEACHANGE INTERNATIONAL INC.,
Defendant-Appellee.
______________________
2013-1066
______________________
Appeal from the United States District Court for the
District of Delaware in No. 01-CV-0011, Judge Leonard P.
Stark.
______________________
Decided: October 10, 2013
______________________
GREGORY A. CASTANIAS, Jones Day, of Washington,
DC, argued for plaintiff-appellant. With him on the brief
were RYAN D. NEWMAN; and KRISTA S. SCHWARTZ and
ISRAEL SASHA MAYERGOYZ, of Chicago, Illinois. Of counsel
was MARY B. GRAHAM, Morris, Nichols, Arsht & Tunnell,
LLP, of Wilmington, Delaware.
STEVEN M. BAUER, Proskauer Rose, LLP, of Boston,
Massachusetts, argued for defendant-appellee. With him
on the brief were KIMBERLY A. MOTTLEY, JUSTIN J.
DANIELS and THOMAS HOEHNER. Of counsel was MELANIE
2 NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC.
K. SHARP, of Young, Conaway, Stargatt & Taylor, LLP, of
Wilmington, Delaware.
______________________
Before RADER, Chief Judge, PROST and TARANTO,
Circuit Judges.
PROST, Circuit Judge.
On July 31, 2009, ARRIS Group, Inc. (“ARRIS”) 1 filed
a motion to hold SeaChange International Inc.
(“SeaChange”) in contempt of a permanent injunction
order. The United States District Court for the District of
Delaware found that ARRIS failed to meet its burden of
showing contempt by clear and convincing evidence and
declined to hold SeaChange in contempt. ARRIS appeals.
Because the district court did not abuse its discretion in
denying the contempt motion, we affirm.
I
ARRIS and SeaChange are providers of video-on-
demand products and services. ARRIS owns U.S. Patent
No. 5,805,804 (“’804 patent”), which discloses and claims a
media server capable of transmitting multimedia infor-
mation over any network configuration in real time to a
client that has requested the information. The patented
technology allows a user to purchase videos that are then
streamed to a device such as a television.
ARRIS commenced the present litigation on January
8, 2001, alleging the infringement of certain claims of the
1 When the underlying litigation in this case began,
ARRIS was known as nCUBE Corporation. Eventually,
nCUBE Corporation was acquired by C–COR Corpora-
tion. Subsequently, ARRIS purchased C–COR. For
clarity’s sake, we refer to nCUBE, C–COR, and ARRIS
collectively as ARRIS.
NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC. 3
’804 patent by SeaChange’s Interactive Television (“ITV”).
On May 28, 2002, the jury returned a verdict in ARRIS’s
favor, finding that SeaChange willfully infringed the
asserted claims in the ’804 patent. We later affirmed the
jury verdict and the district court’s subsequent decision to
enhance the damages award. See nCube Corp. v.
SeaChange Int’l, Inc., 436 F.3d 1317 (Fed. Cir. 2006).
Following our affirmance, on April 6, 2006, the dis-
trict court entered a permanent injunction enjoining
SeaChange from selling products that infringe the ’804
patent. Specifically, SeaChange was enjoined from “mak-
ing, using, selling, or offering to sell . . . the SeaChange
Interactive Television System . . . as well as any devices
not more than colorably different therefrom that clearly
infringe the Adjudicated Claims of the ’804 patent.”
nCube Corp. v. SeaChange Int’l, Inc., 809 F. Supp. 2d 337,
341-42 (D. Del. 2011).
Seven days after the 2002 jury verdict, and approxi-
mately four years before the entry of the permanent
injunction, SeaChange began to modify its ITV system.
Soon after, SeaChange released a system that it views as
outside the scope of the ’804 patent. Naturally, ARRIS
disagrees. The parties attempted to resolve their differ-
ences without litigation, but failed. On July 31, 2009,
ARRIS filed a motion in the United States District Court
for the District of Delaware seeking to hold SeaChange in
contempt of the permanent injunction alleging that
SeaChange’s modifications were minor changes that did
not remove any key components or the relevant function-
ality that formed the basis for the jury’s infringement
verdict. The district court found that ARRIS failed to
prove contempt by clear and convincing evidence and,
therefore, declined to hold SeaChange in contempt.
ARRIS appeals.
4 NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC.
A
Only claim 4 of the ’804 patent—specifically, the itali-
cized limitation below—is at issue in this appeal.
4. A computer-implemented method for re-
trieving and transporting multimedia data be-
tween a client and a server on a network, said
computer-implemented method comprising the
steps of:
receiving a client request for initialization in a
message to an upstream manager in said server,
said upstream manager being coupled to a first
network;
obtaining an upstream physical address for
said client as said client request enters said serv-
er;
allocating a downstream physical address and
downstream logical address to said client corre-
sponding to the upstream physical address ob-
tained for said client, said downstream physical
address being used by a downstream manager for
sending a stream of said multimedia data from a
service on said server to said client, said down-
stream manager being coupled to a second net-
work; and
updating a connection service table with said
upstream physical address, said downstream
physical address, and said downstream logical ad-
dress for said client.
’804 patent col. 25 ll. 22-42 (emphasis added).
In order to function, the ITV system utilizes a series
of identifiers, including one known as the ClientID and
another known as the SessionID. The ClientID is a 20-
byte data field containing addressing information includ-
ing, inter alia, a 6-byte MAC address. The SessionID is a
NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC. 5
10-byte data field that also includes the 6-byte MAC
address. At the May 2002 trial, ARRIS’s expert, Dr.
Schonfeld testified that the ClientID met the upstream
physical address limitation of claim 4, and that the sys-
tem’s Connection Table (combined with something called
the Stream Table) met the connection service table limita-
tion. J.A. 5024. Dr. Schonfeld also explained how the
upstream physical address was updated in the connection
service table and how the accused system actually used
the ClientID to refer to the particular client. Id. Notably,
neither ARRIS, nor its expert, ever mentioned the Ses-
sionID as potentially being the upstream physical ad-
dress. And while a SeaChange witness stated in passing
that the SessionID was another identifier of the client,
J.A. 5164, ARRIS’s infringement proof and argument
included no contention that the system found to infringe
used the SessionID as such an identifier, and ARRIS does
not contend that the modified system does so either.
Following the jury verdict of infringement, SeaChange
modified its system so that the Connection Table (i.e. the
“connection service table”) in the ITV system no longer
received the ClientID. Instead, the processing of the
ClientID that previously occurred in the Connection Table
in SeaChange’s infringing ITV system was relocated and
performed elsewhere in SeaChange’s modified ITV sys-
tem. The district court pointed out that there are a
number of facts to which the parties agree:
The parties do not dispute that, as a result of
SeaChange’s redesign efforts, the Connection Ta-
ble is no longer updated with the ClientID in the
modified ITV system. Nor do the parties dispute
that the Connection Table is updated with the
SessionID in both the infringing and modified ITV
systems; this functionality was not changed dur-
ing SeaChange’s redesign efforts. The parties
likewise appear to agree that the ClientID and
SessionID both contain the same 6-byte “MAC ad-
6 NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC.
dress” information. Thus, whereas SeaChange’s
infringing ITV system previously updated the
Connection Table with both the ClientID and Ses-
sionID (each containing the same MAC address
information), the modified ITV system now up-
dates the Connection Table with only the Ses-
sionID (which still contains MAC address
information).
nCube Corp. v. SeaChange Int’l Inc., CA 01-011-LPS, 2012
WL 4863049 (D. Del. Oct. 9, 2012).
II
On a contempt motion, the party seeking to enforce
the injunction bears the burden of proving by clear and
convincing evidence “both that the newly accused product
is not more than colorably different from the product
found to infringe and that the newly accused product
actually infringes.” TiVo Inc. v. EchoStar Corp., 646 F.3d
869, 882-83 (Fed. Cir. 2011) (en banc). While we review
the grant or denial of a motion for contempt of an injunc-
tion for abuse of discretion, see Merial Ltd. v. Cipla Ltd.,
681 F.3d 1283, 1292 (Fed. Cir. 2012), we review the
finding as to whether two products are more than colora-
bly different for clear error. TiVo, 646 F.3d at 883. A
district court abuses its discretion, by definition, where its
decision rests on an error of law. Harris Corp. v. Ericsson
Inc., 417 F.3d 1241, 1248 (Fed. Cir. 2005).
Prior to TiVo, the colorable-differences prong required
determining “whether ‘substantial open issues with
respect to infringement to be tried’ exist.” TiVo, 646 F.3d
at 883 (quoting KSM Fastening Sys., Inc. v. H.A. Jones
Co., 776 F.2d 1522, 1532 (Fed. Cir. 1985)). In TiVo, we
rejected “that infringement-based understanding of the
colorably different test.” Id. at 882. Rather, in determin-
ing whether more than colorable differences are present
the court focuses “on those elements of the adjudged
infringing products that the patentee previously contend-
NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC. 7
ed, and proved, satisfy specific limitations of the asserted
claims.” Id. We went on to explain in TiVo that:
Where one or more of those elements previously
found to infringe has been modified, or removed,
the court must make an inquiry into whether that
modification is significant. If those differences be-
tween the old and new elements are significant,
the newly accused product as a whole shall be
deemed more than colorably different from the ad-
judged infringing one, and the inquiry into wheth-
er the newly accused product actually infringes is
irrelevant. Contempt is then inappropriate.
Id. Finally, we must be mindful that contempt “is a
severe remedy, and should not be resorted to where there
is a fair ground of doubt as to the wrongfulness of the
defendant’s conduct.” Cal. Artificial Stone Paving Co. v.
Molitor, 113 U.S. 609, 618 (1885).
A
ARRIS bore the burden of proving both that the modi-
fied ITV system is not more than colorably different from
the ITV system found to infringe and that the modified
ITV system actually infringes. TiVo, 646 F.3d at 882-83.
The district court concluded that ARRIS proved neither.
The thrust of ARRIS’s argument with respect to the
colorable-differences prong of TiVo is that while the
ClientID in the modified system no longer meets the
“upstream physical address” limitation because it is no
longer updated in the Connection Table, the Connection
Table in the modified system is still updated with the
SessionID. ARRIS contends that the differences between
the ClientID and the SessionID are not significant and,
therefore, no more than colorable.
Prior to beginning its analysis, the district court noted
that only the ClientID of SeaChange’s infringing ITV
system was previously accused at trial as satisfying the
8 NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC.
“upstream physical address” limitation. nCube, 2012 WL
4863049, at *4. The ClientID in the modified system
performs the same task as it did in the old system, but it
does so in a way that all parties agree is non-infringing.
Id. Thus, the court held that ARRIS did not prove by
clear and convincing evidence that there is no colorable
difference between the ClientID in the two systems. The
court also found that ARRIS could not rely on the Ses-
sionID to meet this prong of TiVo because it was not
identified at trial as meeting this limitation. Id. at *5.
ARRIS contends that the court erred by ignoring the
“removed” language of TiVo and failing to analyze wheth-
er removing the ClientID from the Connection Table was
a significant change to the system when the SessionID
remains. TiVo states that “[w]here one or more of those
elements previously found to infringe has been modified,
or removed the court must make an inquiry into whether
that modification is significant.” TiVo, 646 F.3d at 882(emphasis added). According to ARRIS, the ClientID was
removed, not modified and the district court failed to
analyze the system as one in which the element had been
removed. ARRIS contends that court erred because it
accepted the removal of the ClientID as dispositive of the
colorable-differences prong. In short, ARRIS argues that
the district court ended its analysis where it should have
begun. We disagree.
The difference between the infringing and modified
systems represents a modification rather than a removal
of the accused element. The relevant element of the
adjudged infringing system is the Connection Table,
which was updated with the ClientID. Neither the Con-
nection Table, nor the ClientID were removed from the
infringing device. Rather, the ClientID was moved out of
the Connection Table and placed elsewhere in the modi-
fied system. The district court found this modification
significant because the ClientID still performs the same
relevant functions in both systems, but does so in a way
NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC. 9
that all parties admit puts the ClientID outside the claim,
i.e., not through updating in the Connection Table. That
is a significant change to the system. The district court
properly found that ARRIS “failed to prove, by clear and
convincing evidence, that there is no colorable difference
between the ClientID functionality in the infringing ITV
system and the ClientID functionality in the modified ITV
system.” nCube, 2012 WL 4863049, at *5.
ARRIS also argues that the court erred in its analysis
by failing to compare the Connection Table of the infring-
ing system, which is updated with both the ClientID and
the SessionID, with the Connection Table of the modified
system, which is updated only with the SessionID. In
short, ARRIS argues that the ClientID and SessionID
each contain the same 6-byte MAC address information
and, therefore, the Connection Table in both versions of
the system is updated with the MAC address. In the
infringing system the Connection Table was updated with
the two MAC addresses and in the modified system it is
updated with only one. That, according to ARRIS, is an
insignificant difference.
In order for this argument to hold sway, the MAC ad-
dress must be the portion of the ClientID that meets the
upstream physical address limitation of claim 4. The
problem is that ARRIS never relied on the MAC address
at trial to prove infringement. Rather, ARRIS relied on
the ClientID to prove infringement, but never called out
the MAC address as the infringing aspect of that element.
As it stands, there are significant differences between the
ClientID and the SessionID. As is evident from the
district court opinion, they are made up of different con-
stituent numbers and are actually used in SeaChange’s
systems to perform distinct functions. ARRIS does not
challenge these facts.
Finally, ARRIS complains that it need not prove every
possible avenue of infringement at trial and, as such, it
10 NCUBE CORPORATION v. SEACHANGE INTERNATIONAL INC.
was under no obligation to prove that the SessionID also
met the upstream physical address of the claim. Though
ARRIS is correct that it need not prove every avenue of
infringement, it is likewise true that the determination of
whether more than colorable differences are present
requires the court to focus “on those elements of the
adjudged infringing products that the patentee previously
contended, and proved, satisfy specific limitations of the
asserted claims.” TiVo, 646 F.3d at 882. As the separa-
tion of the colorable-differences and infringement compo-
nents in TiVo indicates, the colorable-differences standard
focuses on how the patentee in fact proved infringement,
not what the claims require. In this way, the TiVo stand-
ard preserves values of notice and preservation of trial
rights by keeping contempt suitably limited. Here, as
already described, ARRIS’s infringement proof focused
specifically on the ClientID, not the Mac address or the
SessionID, and—whether unnecessarily or not—stressed
how the accused system actually used the ClientID, as to
which the SessionID is colorably different.
III
For the foregoing reasons, we conclude that the dis-
trict court did not err in its factual findings and, there-
fore, did not abuse its discretion in denying ARRIS’s
motion for contempt. Because we affirm the district
court’s analysis with respect to its treatment of the color-
able-differences prong of TiVo, we need not reach the
question of actual infringement by the modified ITV
system.
AFFIRMED