Synchronoss Technologies v. Dropbox Inc

• Court: District Court, N.D. California
• Decided: February 14, 2020
• Docket: 4:16-cv-00119
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SYNCHRONOSS TECHNOLOGIES, INC., Case No. 16-cv-00119-HSG

8 Plaintiff, ORDER DENYING DROPBOX INC.'S MOTION FOR ATTORNEYS' FEES 9 v. Re: Dkt. Nos. 435, 436, 449, 461, 465 10 DROPBOX INC., et al., 11 Defendants.

12 Pending before the Court is Defendant Dropbox, Inc.’s (“Dropbox”) motion for attorneys’ 13 fees. Dkt. No. 436 (“Mot.”). The parties also filed motions to seal portions of their briefs and 14 accompanying exhibits. Dkt. Nos. 435, 449, 461, and 465. For the reasons detailed below, the 15 Court DENIES Dropbox’s motion for attorneys’ fees and GRANTS in part and DENIES in part 16 the parties’ motions to seal. 17 I. BACKGROUND 18 Plaintiff Synchronoss Technologies, Inc. (“Synchronoss”) filed this action on March 27, 19 2015, in the Northern District of New Jersey, alleging infringement of United States Patent Nos. 20 6,671,757 (“the ’757 Patent”), 7,587,446 (“the ’446 Patent”) and 6,757,696 (“the ’696 Patent”). 21 Dkt. No. 1. On December 30, 2015, Defendant’s motion to transfer the case to the Northern 22 District of California was granted. Dkt. Nos. 24, 35. The Court granted Defendant’s motion for 23 summary judgment of non-infringement of the patents-in-suit on June 17, 2019. Dkt. No. 406. 24 II. LEGAL STANDARD 25 A. Motion for Attorneys’ Fees 26 Section 285 of the Patent Act states that “[t]he court in exceptional cases may award 27 reasonable attorney fees to the prevailing party.” 35 U.S.C.A. § 285. The Supreme Court has held 1 strength of a party’s litigating position (considering both the governing law and the facts of the 2 case) or the unreasonable manner in which the case was litigated. District courts may determine 3 whether a case is exceptional in the case-by-case exercise of their discretion, considering the 4 totality of the circumstances.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 5 1749, 1756 (2014) (internal quotation marks omitted). Further, “[t]here is no precise rule or 6 formula for making these determinations, but instead equitable discretion should be exercised in 7 light of the considerations we have identified.” Id. (internal quotation marks omitted). 8 B. Motions to Seal 9 For motions to seal that comply with the local rules, courts generally apply a “compelling 10 reasons” standard. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 677–78 (9th Cir. 2010). “This 11 standard derives from the common law right ‘to inspect and copy public records and documents, 12 including judicial records and documents.’” Id. (quoting Kamakana v. City & Cty. of Honolulu, 13 447 F.3d 1172, 1178 (9th Cir. 2006)). “Unless a particular court record is one traditionally kept 14 secret, a strong presumption in favor of access is the starting point.” Kamakana, 447 F.3d at 1178 15 (quotation marks and citation omitted). To overcome this strong presumption, the moving party 16 must “articulate compelling reasons supported by specific factual findings that outweigh the 17 general history of access and the public policies favoring disclosure, such as the public interest in 18 understanding the judicial process.” Id. at 1178–79 (citations, quotation marks, and alterations 19 omitted). “In general, compelling reasons sufficient to outweigh the public’s interest in disclosure 20 and justify sealing court records exist when such court files might have become a vehicle for 21 improper purposes, such as the use of records to gratify private spite, promote public scandal, 22 circulate libelous statements, or release trade secrets.” Id. at 1179 (quotation marks and citation 23 omitted). The Court must: 24 balance the competing interests of the public and the party who seeks to keep certain judicial records secret. After considering these 25 interests, if the Court decides to seal certain judicial records, it must base its decision on a compelling reason and articulate the factual 26 basis for its ruling, without relying on hypothesis or conjecture. 27 Id. (citations, brackets, and quotation marks omitted). 1 to file under seal must submit “a request that establishes that the document, or portions thereof, are 2 privileged, protectable as a trade secret or otherwise entitled to protection under the law . . . . The 3 request must be narrowly tailored to seek sealing only of sealable material . . . .” Civil L.R. 79- 4 5(b). Courts have found that “confidential business information” in the form of “license 5 agreements, financial terms, details of confidential licensing negotiations, and business strategies” 6 satisfies the “compelling reasons” standard. See In re Qualcomm Litig., No. 3:17-cv-0108- 7 GPCMDD, 2017 WL 5176922, at *2 (S.D. Cal. Nov. 8, 2017) (observing that sealing such 8 information “prevent[ed] competitors from gaining insight into the parties’ business model and 9 strategy”); Finisar Corp. v. Nistica, Inc., No. 13-cv-03345-BLF (JSC), 2015 WL 3988132, at *5 10 (N.D. Cal. June 30, 2015). 11 Finally, records attached to motions that are only “tangentially related to the merits of a 12 case” are not subject to the strong presumption of access. Ctr. for Auto Safety v. Chrysler Grp., 13 LLC, 809 F.3d 1092, 1101 (9th Cir. 2016). Accordingly, parties moving to seal such records need 14 only meet the lower “good cause” standard of Rule 26(c). Id. at 1097. The “good cause” standard 15 requires a “particularized showing” that “specific prejudice or harm will result” if the information 16 is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th 17 Cir. 2002) (citation and internal quotation marks omitted); see also Fed. R. Civ. P. 26(c). 18 III. DISCUSSION 19 A. Motion for Attorneys’ Fees 20 Dropbox argues that because (1) Synchronoss’s substantive positions were unreasonable 21 after the Court’s claim construction hearing and (2) Synchronoss engaged in misconduct, this case 22 qualifies as an “exceptional case” under 35 U.S.C. § 285. See Mot. at 8–23. 23 i. Strength of Synchronoss’s Substantive Positions 24 Dropbox first argues that Synchronoss’s position on direct infringement of the ’757 Patent 25 and ’446 Patent was objectively meritless because it was “premised on Dropbox’s distribution of 26 software alone.” Mot. at 9. At the claim construction hearing, the Court adopted Plaintiff’s 27 construction of the terms “device” and “system.” It defined the terms as: purpose, and may include hardware components of a computer 1 system, personal information devices, hand-held computers, notebooks, or any combination of hardware which may include a 2 processor and memory which is adapted to receive or provide information to another device; or any software containing such 3 information residing on a single collection of hardware or on different collections of hardware 4 Dkt. No. 168 at 9. Dropbox argues that because the Court held that the claim construction order 5 unambiguously foreclosed Synchronoss’s “software-only” position, Synchronoss’s “choice to 6 maintain its infringement position[] . . . was objectively baseless.” Mot. at 10 (quoting Spitz 7 Techs. Corp. v. Nobel Biocare USA LLC, No. SACV 17-00660 JVS (JCGx), 2018 WL 6164300, 8 at *6 (C.D. Cal. June 7, 2018), aff’d, 773 F. App’x 625 (Fed. Cir. 2019). Synchronoss responds 9 that while the Court disagreed with its construction, Synchronoss understood the phrase “software 10 . . . residing on . . . hardware to be focused on software” and not require that the hardware be made 11 and sold by Dropbox. Opp. at 5. It further argues that this misunderstanding does not make this 12 case exceptional, in contrast to a case like Spitz, in which the court rejected the patentee’s claim 13 construction. Id. at 6. Here, the Court adopted Synchronoss’s proposed claim construction, but 14 disagreed with its interpretation. Id. 15 Although the Court agrees that the “claim construction order unambiguously held that 16 ‘[first/second] system’ did not cover software alone,” Synchronoss’s position did not disregard 17 this construction. Instead, it interpreted the construction (erroneously, in the Court’s view) as 18 supporting an infringement claim under Uniloc USA v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 19 2011). See Dkt. No. 146 at 8. Uniloc USA is distinguishable for the reasons set forth in the 20 Court’s summary judgment order, but this does not make Synchronoss’s argument frivolous. In 21 light of the totality of the record, the Court in its discretion finds that Synchronoss’s position was 22 not so exceptional as to warrant the award of attorneys’ fees.1 23 Dropbox next argues that Synchronoss’s arguments regarding the ’446 Patent were also 24

25 1 Dropbox also argues that Synchronoss’s position on the “previous state of said data” limitation after the claim construction hearing was contrary to the construction accepted by the Court and 26 thus entitles it to attorneys’ fees. Mot. at 11. Importantly, the Court did not address this issue in its summary judgment order or determine the merits of either party’s arguments. See generally 27 Dkt. No. 406. Dropbox effectively asks the Court to determine at this stage whether the 1 meritless. In its claim construction order, the Court adopted a modified version of Defendant’s 2 construction of “digital media file.” Dkt. No. 168 at 25. Specifically, the Court adopted the 3 following definition: “digital audio or video content in the form of a file such as an MPEG, MP3, 4 RealAudio, or Liquid Audio file.” Id. In its summary judgment motion, Dropbox argued that 5 under this construction, the ’446 Patent claims recited an impossibility, since a single generated 6 digital media file cannot itself comprise a directory of digital media files as stated in claim 1 of the 7 ’446 Patent. Dkt. No. 406 at 12. In response, Synchronoss conceded this impossibility, yet 8 argued that a person of ordinary skill in the art reading the claim would have understood it to mean 9 something different than what was written. Id. The Court rejected this argument and granted 10 summary judgment for Dropbox. Id. at 13. 11 Synchronoss’s position was not so exceptional as to warrant the award of attorneys’ fees. 12 The Patent Act requires particularity and precision, but also tolerates “[s]ome modicum of 13 uncertainty.” Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 909 (2014). Just because 14 the Court ultimately agreed with Dropbox when striking the Patent Act’s “delicate balance,” that 15 is not enough to make Synchronoss’s position objectively unreasonable. Id. (quoting Festo Corp. 16 v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722, 731 (2002)). Synchronoss’s expert 17 Christopher Alpaugh stated, “In my opinion, [Dropbox’s expert] has failed to establish that a 18 [person of ordinary skill in the art] as of the priority date of the ’446 Patent could not understand 19 the scope of the claims or what they cover with any reasonable certainty.” Opp. at 12. Both sides 20 litigated this point, and the Court found Dropbox’s position more persuasive. 21 Accordingly, the Court disagrees with Dropbox’s arguments that Synchronoss’s positions 22 made this an exceptional case justifying the award of attorneys’ fees under § 285. The fact that 23 Synchronoss lost does not, by itself, justify a fees award. See Kreative Power, LLC v. Monoprice, 24 Inc., No. 14-cv-02991-SI, 2015 WL 1967289, at *1, 3 (N.D. Cal. Apr. 30, 2015) (denying motion 25 for attorneys’ fees where court previously had granted the defendant’s motion for summary 26 judgment on both non-infringement and invalidity grounds). 27 ii. Manner in Which the Case was Litigated 1 exceptional case warranting a fees award. Mot. at 13. Dropbox first points to several discovery 2 disputes and subsequent motions practice as evidence that Synchronoss unreasonably multiplied 3 proceedings. Mot. at 14–18. The Court finds that this does not constitute conduct “that would rise 4 to the level of misconduct necessary to find this an ‘exceptional case.’” Finjan, Inc. v. Sophos, 5 Inc., 244 F. Supp. 3d 1016, 1029 (N.D. Cal. 2017). This case was “hard fought and zealously 6 litigated,” id., through discovery and motions practice, in a manner that was (perhaps sadly) 7 routine for patent cases, in the Court’s experience. 8 Dropbox also alleges that Synchronoss asserted falsely inflated licenses in order to 9 increase its damages and attempted to obscure this “scheme” with false testimony. Mot. at 18–23, 10 Reply at 11–13. Specifically, Dropbox points to testimony by Synchronoss’s Chief Legal Officer 11 Ronald Prague indicating that the licensing agreement and asset purchases were not related, and 12 were instead “two separate agreements.” Dkt. No. 435-14. To the extent that Dropbox is arguing 13 that the alleged scheme shows misconduct in this case, the Court disagrees. Dropbox’s defense of 14 unclean hands pertained to Synchronoss’s purported actions outside of this litigation. While the 15 defense may have been relevant to the merits of the case, it focused on pre-litigation conduct, not 16 litigation misconduct of the sort that would transform this case into an exceptional one. Further, 17 unlike Eon-Net LP v. Flagstar Bancorp, there is no clear evidence that Synchronoss “lodged 18 incomplete and misleading extrinsic evidence with the court” through Prague’s testimony. 653 19 F.3d 1314, 1325 (Fed. Cir. 2011). Dropbox argues that the testimony attempted to obscure 20 Synchronoss’s conduct, but this is simply its interpretation and characterization of Synchronoss’s 21 licensing activities. There was never a finding or clear evidence that this was the case. 22 Accordingly, in the Court’s discretion, this conduct does not rise to the level of making this an 23 exceptional case. 24 B. Motions to Seal 25 iii. Dkt. No. 435 26 Dropbox seeks to seal portions of its Motion, portions of Exhibits 5, 6, 9, 10, and 17, and 27 the entirety of Exhibits 14, 18, 19, 21–26, 28, 29, and 30. Dkt. No. 435. The Court agrees that 1 third parties, (2) financial terms, and (3) confidential source code. See Apple Inc. v. Samsung 2 Elecs. Co., Ltd., No. 11-CV-01846-LHK, 2012 WL 6115623, at *2 (N.D. Cal. Dec. 10, 2012) 3 (considering “confidential source code”); Finisar Corp., 2015 WL 3988132, at *5 (observing that 4 courts “regularly find that litigants may file under seal contracts with third parties that contain 5 proprietary and confidential business information”); In re Qualcomm Litig., 2017 WL 5176922, at 6 *2 (finding that “license agreements, financial terms, details of confidential licensing negotiations, 7 and business strategies” containing “confidential business information” satisfied the “compelling 8 reasons” standard in part because sealing that information “prevent[ed] competitors from gaining 9 insight into the parties’ business model and strategy”). Additionally, the sealing requests seek to 10 seal information materially identical to prior sealing requests, which this Court granted. See Dkt. 11 No. 475 at 3–6. The Court sees no reason why it should here find that information it previously 12 deemed sealable no longer meets the “compelling reasons” standard. The portions of the motion 13 where Synchronoss, the designating party for these redactions, no longer supports their redaction 14 are not sealable. The following chart details which portions of the various filings are and are not 15 sealable:

16 Document Number Portions Sought to be Designating Ruling Public/(Sealed) Sealed Party 17 436/(435-4) Page 15, lines 15, 18-19, Synchronoss GRANT as to page 16, 18 436-18/(435-16) 24, 28 19, 20, 21, 22 portions of Page 16, lines 1, 10, 13-18 Exhibit 17 19 Page 17, line 1 Page 19, lines 17-23, 25 DENY as to pages 15 20 Page 20, lines 6-10, 17-18 and 17, no supporting 21 Page 21, lines 4-7, 12-24 Rule 79-5(e)(1) Page 22, lines 9, 14-15 declaration 22 Portions of Exhibit 17 436-15 /(435-14), Exhibits 14, 21, 22, 26, Synchronoss GRANT 23 436-22/(435-22), 28, 29, 30 (entirety) 436-23/(435-24), 24 436-27(435-32), 25 436-29/(435-34), 436-30/(435-36), 26 436-31/(435-38) 436/(435-4), Page 20, lines 19-28 Blackberry GRANT, previously 27 436-24/(435-26), Page 21, lines 2-3, 7-9, granted by the Court 436-26/(435-30) Page 22, 1-7 1 Exhibits 23, 24, 25 2 (entirety) 436/(435-4) Page 19, lines 27-28 Marlin GRANT, previously 3 436-19/(435-18), Page 20, lines 1-4 granted by the Court 436-20/(435-20) Exhibits 18, 19 (entirety) 4 436-6/(435-6), Exhibit 5, portions of Dropbox GRANT 5 436-7/(435-8), pages 1-4 6 436-10/(435-10) Exhibit 6, portions of page 436-11/(435-12) 2 7 Exhibit 9, portions of pages 4-5, 18, 29-31 8 Exhibit 10, portions of pages 6-8, 13-14, 23 9 10 iv. Dkt. No. 449 Synchronoss seeks to seal portions of its Opposition and the entirety of Exhibits B, D, and 11 E. Dkt. No. 449. The Court agrees that Synchronoss seeks redaction of some sealable 12 information, such as (1) confidential agreements with third parties, (2) financial terms, and (3) 13 confidential source code. However, Dropbox, the designating party for some proposed redactions, 14 does not support various redactions and these portions are not sealable. Further, Synchronoss 15 seeks to file under seal information that is unredacted elsewhere and thus publicly available. For 16 instance, Synchronoss seeks to seal all references to F-Secure, Newbay, Openwave, and OnMobile 17 in its Opposition. See Dkt. No. 449 at 20. However, these entities are referenced publicly in 18 Dropbox’s Motion for Attorney’s Fees. See Dkt. No. 436 at 20–22. These portions are then 19 unsealable. The following chart details which portions of the various filings are and are not 20 sealable: 21 22 Document Number Portions Sought to be Designating Ruling Public/(Sealed) Sealed Party 23 450/(449-4) Page vii, line 7 Synchronoss DENY, this is a citation to a public regulation 24 450/(449-4) Page 8, lines 12, 13, 14, Dropbox DENY, no supporting 25 450-3/(449-5) 15, 17, 18 Rule 79-5(e)(1) Page 9, lines 13, 19, 20, declaration 26 22, 24, 25 Page 24, lines 9, 11, 12 27 Exhibit B (entirety) 1 20, 21, 22, 24 DENY as to pages 20 Page 20, lines 3-5, 22, 25, and 22, information is 2 28 unredacted in Dropbox’s Page 22, lines 3, 4 motion, Dkt. No. 436 at 3 20-22 450-5/(449-7) Exhibit D (entirety) Dropbox GRANT in part, only 4 portions supported in 5 Dropbox’s Rule 79- 5(e)({1) declaration (Dkt. 6 No. 453) 450-6/(449-9) Exhibit E (entirety) GRANT 7 v. Dkt. No. 461 and 465 8 Dropbox seeks to seal limited portions of its Reply. See Dkt. No. 461, 465.7 Most of these 9 portions seek to seal content relating to confidential agreements with third parties, financial terms 10 and confidential source code previously found, in the sections above, to constitute sealable 11 information. Accordingly, the Court GRANTS the motions to seal as to Page 10, lines 18, 21, 22 12 and Page 12, lines 21-22, 24-25. The Court DENIES the motions to seal as to Page 4, line 25 13 = because that information is unredacted elsewhere and thus publicly available. See Dkt. No. 436 at 14 1. 15 IV. CONCLUSION 16 Because Dropbox fails to show that this is an exceptional case, the Court DENIES its 17 = motion for attorney’s fees. For the reasons explained above, the Court GRANTS in part and Z 18 DENIES in part the parties’ motions to seal. The parties are directed to e-file revised versions of 19 the relevant submissions that do not redact portions the Court identified above as nonsealable. All 20 other portions may continue to be redacted. 21 22 IT IS SO ORDERED. 23 Dated: 2/14/2020

25 HAYWOOD S. GILLIAM, JR. United States District Judge 27 || 2 Because Dropbox’s motion to file under seal in Dkt. No. 465 contains the same redactions and 2g || Pagination as Dkt. No. 461, the Court addresses both simultaneously and its holdings apply to both motions.