Veracode, Inc. v. Appthority, Inc.

137 F. Supp. 3d 17, 2015 U.S. Dist. LEXIS 132919, 2015 WL 5749435
CourtDistrict Court, D. Massachusetts
DecidedSeptember 30, 2015
DocketCIVIL ACTION NO. 12-10487-DPW
StatusPublished
Cited by8 cases

This text of 137 F. Supp. 3d 17 (Veracode, Inc. v. Appthority, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Veracode, Inc. v. Appthority, Inc., 137 F. Supp. 3d 17, 2015 U.S. Dist. LEXIS 132919, 2015 WL 5749435 (D. Mass. 2015).

Opinion

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, UNITED STATES DISTRICT JUDGE

I. BACKGROUND.. .32

A. Factual Background... 32

B. Procedural History.. .33

1. Initial Complaint and Pre-Trial Proceedings.. .33

2. Jury Verdict... 34

3. Post-Trial Motions... 34

C. Applicable Standards of Review.. .35

II. DEFENDANT’S INVALIDITY DEFENSES... 36

A Invalidity Defenses Submitted to the Jury...37

1. Background.. ,37

2. Obviousness of’924 Patent.. .37

3. Lack of Written Description.. .41

4. Conclusion.. .44

B. Invalidity Defenses Reserved for the Court.. .44 ,

1. Background.., 44 -

2. Unpatentable Subject Mattel; of ’609 Patent... 45 -,

3. Indefiniteness... 54

4. Conclusion... 59

III. WILLFUL INFRINGEMENT .. .59

A. Direct Infringement.. .60

[32]*321. Legal Standard... 60

2. ’609 Patent... 60

3. ’924 Patent,. .61

B.Willfulness.. .64

1. Subjective Willfulness... 64

2. Objective Willfulness... 69

IV. DAMAGES... 71

A. Appthority’s Motion for a New Trial Based on the Damages Award.. .71

1. Legal Standard... 72

2. Analysis... 72

B. Supplemental Damages... 83

C. Veracode’s Motion for Enhanced Damages... 84

1. Legal Standard... 84

2. Analysis... 85

D. Prejudgment Interest.. .87

V. INJUNCTIVE RELIEF.. .88

A. Background... 88

B. Legal Standard... 88

C. Findings of Fact and Conclusions of Law.. .89

1. Appropriateness of a Permanent Injunction. . .89

2. Scope of the Injunction.. .95

3. Appthority’s Request for a Stay of the Injunction.. .97

VI. MOTIONS FOR ATTORNEYS’ FEES... 99

A. Legal Standard... 99

B. Analysis... 100

1. Prevailing Party Status... 100

2. Exceptional Nature... 100

VII. CONCLUSION.. .103

Plaintiffs Veracode, Inc. and Rovi Solutions Corporation (collectively, “Vera-code,” except where otherwise noted) brought this action against Defendant Appthority, Inc., for infringing two patents, U.S. Patent No. 5,854,924 (the “’924 Patent”) and U.S. Patent No. 7,752,609, (the “’609 Patent”), relating to the analysis and manipulation of computer code. The jury found that Appthority willfully infringed two claims (1 and 5) of the ’924 Patent but did not infringe any claims of the ’609 Patent. The jury also found that all asserted claims of the patents-in-suit were valid. Following a separate presentation of evidence as to damages, the jury awarded $781,857 to Veracode. Before me now is an array of post-trial motions. For the reasons that follow, I. conclude that the jury’s findings and its damages award were supported by substantial evidence, that the claims of the patents-in-suit were valid, that Appthority’s infringement of claims 1 and 5 of the ’924 Patent was willful, that an award of enhanced damages or attorneys’ fees is unwarranted, and that a permanent injunction is appropriate to prevent further infringement of the ’924 Patent.

I. BACKGROUND

A. Factual Background

The underlying claims are described in greater detail in my order on claim construction, see Veracode, Inc. v. Appthority, Inc., 2013 WL 5587946 (D.Mass. Oct. 9, 2013), but a brief summary may be helpful here. Veracode is a computer security company founded in 2006 that provides a cloud-based platform for analyzing flaws and security risks in software applications, as well 'as providing remediation services to help developers fix the flaws in their code. Appthority, Veraeode’s competitor, provides a similar cloud-based platform for analyzing the enterprise risk—specifically through the identification of malware and risky behaviors—in mobile phone applications. Appthority first made its platform available to the public in 2012.

Veracode is the exclusive licensee of the ’924 Patent issued in 1998 and owned by Rovi. The ’924 Patent is a “static debugging tool ... to detect the presence of [33]*33program errors and potential errors” in the machine-code version of a piece of software without actually running the analyzed software. Veracode also owns the ’609 Patent issued in 2010 but claiming priority to 2002. The ’609 Patent is a “software analysis framework” that consists of a method of decompiling machine code— which humans cannot interpret—into a form “that one of a certain skill can analyze.”

Both patents generate an intermediate file from a program’s binary code. Binary code is a machine-readable form of code that allows a computer to run a particular pieeé of software; it is originally written as source code by software developers and then compiled into binary form by a computer. Although binary code is not readable by humans, the intermediate file the patented technology generates is intelligible to persons of ordinary-skill in the art of software development A software developer can reverse engineer the intermediate code to reconstruct or approximate the program’s original source epde.

B. Procedural History
I. Initial Complaint and Pre-Trial Proceedings

Veracode filed its initial complaint on March 16, 2012, alleging willful infringement of the ’924 and ’609 Patents by Appthority. Appthority asserted affirmative defenses of non-infringement and invalidity with respect to both patents. Following the completion of fact discovery, I conducted a Markman hearing and construed relevant claim terms. See generally Veracode, 2013 WL 5587946. Although the parties initiated summary judgment practice, I’ chose to bring the matter to trial for jury fact-finding.

Prior to trial, the parties agreed on limited claims and defenses each could assert at trial. The trial accordingly concerned asserted infringement -by Appthority of claims 1, 5, and 17 of the ’924 Patent1 and claims 1, 13, and 14 of the ’609 Patent.2 Appthority’s defenses for the jury were limited to anticipation, obviousness, and [34]*34invalidity for lack of written description as to each patent. Id. Appthority’s indefiniteness and- other invalidity defenses were reserved for the court. Id.

2. Jury Verdict

I held a ten-day trial on liability followed by a two-day trial on damages. The, jury returned a split verdict.

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Bluebook (online)
137 F. Supp. 3d 17, 2015 U.S. Dist. LEXIS 132919, 2015 WL 5749435, Counsel Stack Legal Research, https://law.counselstack.com/opinion/veracode-inc-v-appthority-inc-mad-2015.