TRUSTID, Inc. v. Next Caller Inc.
1:18-cv-00172
| D. Del. | Jan 5, 2022Background
- TRUSTID (patentee) and Next Caller (developer of VeriCall) compete in caller-authentication/anti-spoofing market; TRUSTID asserted patents (’985, ’532, ’913) and Lanham Act/DTPA claims.
- VeriCall is a cloud-hosted product that interacts with IVR systems, uses AWS resources and machine‑learning code, and is integrated into customers’ systems; Next Caller kept its technology as a trade secret.
- A jury found the asserted patent claims valid but not infringed; found Next Caller liable under the Lanham Act for a “Increase 10% IVR Containment Rate” statement (not for a “pre-answer” claim) and awarded $1.44M compensatory + $1.44M punitive; no DTPA liability.
- Post-trial motions: TRUSTID sought JMOL on infringement of the ’532 and ’985 patents and a new trial on willfulness/damages; Next Caller sought JMOL of no false advertising and removal of punitive damages.
- District Court denied TRUSTID’s JMOL/new-trial requests on infringement (finding reasonable evidentiary bases for the jury’s non‑infringement verdict) and granted Next Caller’s renewed JMOL on the Lanham Act false‑advertising claim and vacated punitive damages (insufficient proof of actual deception; punitive damages unavailable under the Lanham Act).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VeriCall directly infringes asserted claims of the ’532 patent requiring a “system” with memory and processors | Next Caller controls and benefits from AWS processors/memory used by VeriCall, so it uses the claimed system | VeriCall is a component in a larger system relying on AWS and customers’ systems that Next Caller does not control | Denied JMOL for TRUSTID — jury could reasonably credit evidence that Next Caller did not control/benefit from all claimed components |
| Whether VeriCall practices claim 10 of the ’985 patent requiring a system “associated with” the called‑party’s telephonic device | Customers modify their systems to integrate VeriCall, showing VeriCall is “associated with” customers’ systems | Mere connectivity or integration does not make VeriCall "associated with" customer systems (analogy to Amazon consumer vs Amazon systems) | Denied JMOL for TRUSTID — jury could find VeriCall not "associated with" customers |
| Whether accused activities occur “before the incoming call is answered” (the “second‑call”/pre‑answer theory) | Even if VeriCall’s processing occurs after IVR answer, it is still before the agent answers and satisfies the claim | Once an IVR answers, the call is no longer an incoming call; VeriCall’s actions occur after the call is answered and thus do not meet the claim timing | Denied JMOL for TRUSTID — jury could credit that processing occurred after the call was answered by IVR and thus not within the claimed pre‑answer window |
| Whether Next Caller’s “Increase 10% IVR Containment Rate” statement violated the Lanham Act (and whether punitive damages/DTPA relief apply) | Statement was literally false and unsubstantiated; willful misrepresentation supports damages and punitive relief under DTPA | No evidence of actual customer deception or material reliance; punitive damages are not recoverable under Lanham Act | Grants JMOL for Next Caller on Lanham Act (insufficient proof of actual deception for monetary relief); punitive damages vacated as not available under Lanham Act; DTPA claim not sustained by JMOL for TRUSTID |
Key Cases Cited
- Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993) (JMOL standard; view evidence most favorably to nonmovant)
- Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998) (standard for renewed Rule 50(b) motion)
- Intellectual Ventures LLC v. Motorola Mobility LLC, 870 F.3d 1320 (Fed. Cir. 2017) (control/benefit test for direct infringement of system claims)
- Enplas Display Device Corp. v. Seoul Semiconductor Co., 909 F.3d 398 (Fed. Cir. 2018) (substantial‑evidence review in patent cases)
- Warner‑Lambert Co. v. Breathasure, Inc., 204 F.3d 87 (3d Cir. 2000) (elements of a Lanham Act false‑advertising claim)
- Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641 (3d Cir. 1958) (monetary damages require proof of actual deception)
- Johnson & Johnson‑Merck Consumer Pharm. Co. v. Rhone‑Poulenc Rorer Pharms., Inc., 19 F.3d 125 (3d Cir. 1994) (intent to deceive does not alone establish actual deception presumption)
- Caesars World, Inc. v. Venus Lounge, Inc., 520 F.2d 269 (3d Cir. 1975) (punitive damages not available under the Lanham Act)
- Hewlett‑Packard Co. v. Mustek Sys., Inc., 340 F.3d 1314 (Fed. Cir. 2003) (limitations on adopting new claim interpretations at JMOL stage)