HEADWATER RESEARCH LLC, Plaintiff, v. VERIZON COMMUNICATIONS INC., CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, and VERIZON CORPORATE SERVICES GROUP, INC., Defendants.
Case No. 2:23-cv-00352-JRG-RSP
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION
June 4, 2025
Before the Court is the Motion for Partial Summary Judgment that Plaintiff Headwater‘s Damages are Limited by
I. BACKGROUND
On July 28, 2023 Plaintiff Headwater Research LLC filed suit against Defendants, asserting that they infringe four of its patеnts: U.S. Patent Nos. 8,589,541; 8,924,543; 9,198,042; and 9,215,613. Dkt. No.1 at 1. On January 29, 2025, the Parties agreed to dismiss the ‘543 Patent. Dkt. No. 144.
On May 24, 2024, Defendants sent Plaintiff an Arctic Cat letter identifying products that Defendants allege were not properly marked pursuant to
II. APPLICABLE LAW
A. Summary Judgment
Summary judgmеnt should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
The moving party must identify the basis for granting summary judgment and еvidence demonstrating the absence of a genuine dispute of material fact. Celotex, 477 U.S. at 323. If the moving party does not have the ultimate burden of persuasion at trial, the party ‘must either produce evidence negating an essential element of the nonmoving party‘s claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Intellectual Ventures I LLC v. T Mobile USA, Inc., No. 2:17-CV-00577-JRG, 2018 WL 5809267, at *1 (E.D. Tex. Nov. 6, 2018) (quoting Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000)).
B. Patent Marking
It is the plaintiff‘s burden to prove it provided actual notice of infringement or provided constructive notice through compliance with
III. ANALYSIS
A. Actual Notice
In the Motion, Defendants argue that Plaintiff never provided them with actual notice until
In response, Plaintiff appears to dispute this and argues that Defendants did have actual pre-suit notice. See Dkt. No. 202 at 1 (citing Dkt. No. 188-2; Dkt. No. 188-4). The entirety of its arguments and the evidence it cites in support, however, rest on the notion that Verizon was aware of the patents; Plaintiff never points to anything showing that it provided anything to Defendants. See id.; see also Dkt. No. 188-2 (“Verizon had a great deal of knowledge about Headwater‘s patent portfolio. They actually invested in Headwater. Part of their diligence in the investment was looking into Headwater‘s patеnt portfolio.“); see also Dkt. No. 188-4 (“Defendants have had knowledge of or were willfully blind to the [asserted patents] . . . .“).
Because of this, the Court is unpersuaded by Plaintiff‘s arguments. Showing that Verizon was aware of the patents at issue is insufficient to show the required notice of infringement. See generally Lans v. Digital Equip. Corp., 252 F.3d 1320 (Fed. Cir. 2001). Notice is an affirmative act. Id. Therefore, the inquiry concerns the plaintiff‘s actions, not the defendant‘s knowledge. Id. Here, because Plaintiff has not shown that it provided actual notice to Defendants, the Court finds that summary judgment of no pre-suit actual notice should be GRANTED.
B. Constructive Notice
1. The ‘613 Patent
In the Motion, Defendants assert that Plaintiff did not mark for the ‘613 Patent and cannot carry its burden to show that the ItsOn рroducts did not practice the claims of the ‘613 Patent. Dkt. No. 188 at 6.
In response, Plaintiff concedes that the ‘613 Patent never appeared on its virtual marking page, but that it has sufficient evidence to show that the ItsOn products did not practice the ‘613 Patent. Dkt. No. 202 at 6. Specifically, Plaintiff points to the report of its expert Dr. Wesel, in
The Court finds that summary judgment is inappropriate here. First, the Court notes that, despite it being a “low bar,” in order for an alleged infringer to successfully carry its burden via an Arctic Cat letter, it must identify products that ”it believes are unmarked patented Articles.” Arctic Cat I, 876 F.3d at 1368 (emphasis added) (internal quotations omitted). Accordingly, sending such notice to a plaintiff acts as a concession by the alleged infringer that it believes the instrumentality at issue practices the asserted claims.
Here, however, Defendants never stated that they believed that the ItsOn products practiced the claims of the patents at issue. See generally Dkt. No. 188-15. They merely asserted that Plaintiff had once contended that the products practiced the ‘613 Patent. See id. Accordingly, Defendants failed to carry their burden from the outset. However, since Plaintiff never objects on this basis, it has waived this argument. See generally Dkt. No. 202.
The state of the record as of the filing of the instant Motion was that both parties agreed that the ItsOn products did not practice the asserted patents. See e.g. Dkt. No. 188 at 1; compare e.g. Dkt. No. 188-8 at ¶ 86. Thus, the Motion can be denied on this basis alone. Regardless, and in the alternative, there remains a genuine dispute of material fact as discussed below.
Turning to the parties’ arguments, the Court disregards Plaintiff‘s arguments concerning fact witnesses. Fact witnesses are generally not competent to testify as to whether a product practices a patent claim. This case is no exception. See generally
Regardless, Plaintiff‘s experts do opine that the ItsOn products do not practice the ‘613
Accordingly, the motion for summary judgment should be DENIED as to the ‘613 Patent.
2. The ‘541 Patent
In the Motion, Defendants argue that Plaintiff cannot demonstrate sufficient marking for the ‘541 Pаtent. Dkt. No. 188 at 7. In support of this, they forward three arguments. First, they assert that Plaintiff was able to physically mark the products at issue, but did not do so (marking only via the virtual marking page), and that it cannot establish that it was not feasible to physically mark. See id. at 7-8.
Second, they assert that Plaintiff has not proven that it included a link on all practicing products. Id. at 8. Specifically, they contend that as many as 8 million Sprint devices did not contain a link to ItsOn‘s virtual marking page. Id. Thus, argue Defendants, Plaintiff did not comply with marking requirements on “substantially all of” the accused products. Id. (quoting Am. Med. Sys. v. Med. Eng‘g Corp., 6 F.3d 1523, 1538 (Fed. Cir. 1993)).
Third, they assert that the virtual marking page does not sufficiently tie ItsOn products to specific patents. Id. Specifically, they allege that “the entirety of ItsOn‘s marking website was a list of patents with the following text: ‘ItsOn services and devices are protected by patents in the U.S. and elsewhere. This notice is provided to satisfy the virtual patent marking provisiоns of various jurisdictions, including ...
In response to the first point, Plaintiff argues that Defendants point to no case law stating such a proposition, and that the case law on point merely requires a showing that virtual marking is commensurate with physical marking. Dkt. No. 202 at 10 (citing Egenera Inc v. Cisco Sys., Inc., 547 F. Supp. 3d 112, 126 (D. Mass. 2021)).
In response to the second point, Plaintiff argues that, to the extent that there were any deficiencies in marking, they were cured by not later than June 7, 2017, which is before the July 2017 damages period began. Id. at 7-8 (citing Arctic Cat II, 950 F.3d at 864). Therefore, argues Plaintiff, it is entitled to recover full damages. See id. at 7. Specifically, Plaintiff asserts that before the damages period began, the allegedly unmarked postpaid devices were deactivated with the ItsOn software removed. Id. (citing Dkt. No. 202-2; Dkt. No. 202-6; Dkt. No. 202-8; Dkt. No. 202-9; Dkt. No. 202-10; Dkt. No. 202-11; Dkt. Nо. 202-19). As to the prepaid devices,1 Plaintiff asserts that these were being consistently marked by February 1, 2016 with the ‘541 Patent added to the
Further, Plaintiff asserts that it undertook reasonable efforts to ensure Sprint‘s compliance with marking obligations and points to Maxwell v. J. Baker, Inc. which provides “[w]ith third parties unrelated to the patentee ... [w]hen the failure to mark is caused by someone other than the patentee, the court may consider whether the patentee made reasonable efforts to ensure compliance with the marking requirements.” Id. at 10-11 (citing Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1111-12 (Fed. Cir. 1996)). Plaintiff contends it had an agreement with ItsOn requiring ItsOn to mark and ItsOn had an agrеement with Sprint requiring Sprint to mark its products which included the ItsOn software. Id. at 11.
In response to the third point, Plaintiff argues that the website clearly associates the ItsOn service and devices providing the ItsOn service as embodying the claims of the listed patents. Id. at 8-10 (citing Dkt. No. 188-13 (“The ItsOn service, and the devices that рrovide the ItsOn service, embody technology claimed in the following U.S. Patents . . . .“); Dkt. No. 188-14 at 1). Headwater further contends the phones themselves directly associate the particular version of the software with the patents by linking users of the software to those patents. Id. (citing Dkt. No. 202-10; Dkt. No. 202-14; Dkt. No. 202-16; Dkt. No. 202-17; Dkt. No. 188-8; Dkt. No. 188-14).
The Court finds that summary judgment is inappropriate here.
As with the ‘613 Patent, Defendants failed to carry their burden from the outset with respect to their Arctic Cat letter by not stating that they “believed” the ItsOn products practice the ‘541 Patent. See generally Dkt. No. 188-15. Again, however, Plaintiff waived any objection on this basis by not arguing it in its briefing. See generally Dkt. No. 202.
Regarding Defendants’ first point, the Court is unpersuaded, particularly in view of Defendants’ failure to cite any law supporting their assertion regarding feasibility. Plaintiff need
Regarding Defendants’ second point, the Court finds that there is a genuine dispute of material fact here. As we previously found in Headwater Rsch. LLC v. Samsung Elecs. Co., No. 2:22-cv-00422 (hereinafter “Headwater I“) “[Plaintiff] has shown that Sprint [had already] began the termination of its agreement with ItsOn as to the post-paid phones . . . . This began the process of removing ItsOn‘s software from post-paid phones. Headwater I, 2024 WL 3843760 at *4 (E.D. Tex. July 15, 2024). If Plaintiff‘s evidence is believed, then this was completed before the damages period began and, therefore, there is no marking issuе with respect to the postpaid devices in line with Arctic Cat II. See Arctic Cat II, 950 F.3d at 864. Further, the Court found in Headwater I that the “ItsOn‘s agreement provided Sprint ‘shall reproduce on each copy, any notice of patent.‘” Headwater I, 2024 WL 3843760 at *4. This is sufficient to create a triable issue of fact with respect to whether Plaintiff undertook reasonable efforts to comply with the marking statute in line with Maxwell, 86 F.3d 1111-12.
Regarding Defendants’ third point, the Court finds that there is a genuine dispute of material fact here. As we previously found in Headwater I, while virtual marking requires a website “that associates the patented Article with the number of the patent” (
3. The ‘042 Patent
The parties’ arguments regarding the ‘042 Patent mirror those for the ‘541 Patent. See Dkt. No. 188 at 9; compare Dkt. No. 202 at 7-11. Accordingly, the Court finds that summary judgment is inappropriate as to the ‘042 Patent (on this motion) as well.
IV. CONCLUSION
For the reasons discussed above, the Court rеcommends that the Motion should be GRANTED as to Plaintiff not having given actual pre-suit notice to Defendants, and otherwise DENIED.
A party‘s failure to file written objections to the findings, conclusions and recommendations contained in this report within 14 days bars that party from de novo review by the District Judge of those findings, conclusiоns, and recommendations and, except on grounds of plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted and adopted by the district court.
SIGNED this 4th day of June, 2025.
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE