DCT

4:23-cv-06121

CyboEnergy Inc v. Northern Electric Power Technology Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 4:23-cv-06121, N.D. Cal., 01/05/2024
  • Venue Allegations: Plaintiff alleges venue is proper because Defendant has a regular and established place of business in the district, has committed acts of infringement in the district, and conducts substantial business in the forum.
  • Core Dispute: Plaintiff alleges that Defendant’s power inverters infringe a patent related to smart, scalable, and daisy-chainable power inverters, and that Defendant’s continued sales constitute a breach of a prior settlement agreement between the parties.
  • Technical Context: The technology relates to DC-to-AC power inverters used in solar power systems, a key component in the renewable energy market for converting power from solar panels into usable AC electricity for the power grid.
  • Key Procedural History: The complaint alleges this action follows a "Prior Litigation" (Cause No. 3:21-cv-08534) between the same parties, which was terminated by a settlement agreement on October 19, 2022. That agreement allegedly permitted Defendant to sell its remaining inventory of certain inverters until June 30, 2023. This new suit alleges that Defendant breached the agreement and willfully infringed the patent-in-suit by continuing to sell the accused products after the deadline. The complaint also states that Plaintiff is dropping a claim for infringement of a different patent ('488 patent) without prejudice.

Case Timeline

Date Event
2009-07-16 '133 Patent Priority Date
2014-07-22 '133 Patent Issue Date
2022-10-19 Settlement agreement executed to terminate prior litigation
2023-06-30 Deadline for Defendant to sell remaining inventory under settlement
2024-01-05 First Amended Complaint Filing Date

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,786,133 - "Smart and Scalable Power Inverters," issued July 22, 2014

The Invention Explained

  • Problem Addressed: The patent’s background section identifies several shortcomings with traditional solar power systems that rely on a single, large, centralized power inverter. These include the entire system shutting down if the one inverter fails, high costs, and system-wide performance being dictated by the weakest-performing solar module, which prevents module-level power optimization. (’133 Patent, col. 1:32-49).
  • The Patented Solution: The invention describes a decentralized system using multiple, smaller "smart" inverters, each potentially connected to its own DC power source (e.g., a solar panel). The core innovation is a "daisy chain" architecture where the AC output of one inverter connects to the AC input of the next inverter in sequence. This design simplifies wiring, allows for modular scalability, and enables the total AC power to be the sum of the power supplied by each individual unit. (’133 Patent, Abstract; Fig. 3; col. 3:49-59). This architecture is intended to improve reliability by eliminating the single point of failure and to optimize energy production at the individual module level. (’133 Patent, col. 1:57 - col. 2:2).
  • Technical Importance: This distributed, or "microinverter," approach represented a shift toward more resilient, efficient, and scalable solar power system designs by enabling optimization and control at the panel level rather than at the aggregate array level. (’133 Patent, col. 1:57-62).

Key Claims at a Glance

  • The complaint asserts claims 1-24. (Compl. ¶18). The independent claims appear to be claims 1, 5, and 9.
  • Independent Claim 1: Describes a system comprising:
    • A plurality of power inverters, each with one DC input port, an AC input port, and an AC output port.
    • The AC output port of each inverter is connected in a "daisy chain" to the AC input port of the next inverter.
    • Each inverter contains internal components including a DC-DC boost converter and a DC-AC inverter.
  • Independent Claim 5: Describes a similar system, but where each power inverter has two DC power input ports and internal components to support them, including a pair of DC-DC boost converters and a DC power combiner.
  • Independent Claim 9: Describes a generalized version of the system where each power inverter has "m" DC power input ports, where "m" is an integer greater than or equal to one.
  • The complaint alleges infringement of claims 1-24, thereby reserving the right to assert dependent claims. (Compl. ¶18).

III. The Accused Instrumentality

Product Identification

  • The accused products are power inverters manufactured and sold by Defendant, specifically including the "BDM-600 power inverter" and the "BDM-800" inverter. (Compl. ¶9, ¶11, p. 6).

Functionality and Market Context

  • The complaint alleges the accused products are "power inverters" that possess "AC wires and connectors to support the daisy-chaining design." (Compl. ¶11). This functionality, which allegedly allows multiple inverters to be connected together on their AC side, is the basis of the infringement claim. The complaint alleges that Defendant continues to "manufacture, market, offer for sale and sale" these inverters in violation of both the patent and the prior settlement agreement. (Compl. ¶11).

IV. Analysis of Infringement Allegations

The complaint alleges that Defendant’s BDM-600 and BDM-800 power inverters, when used in a solar power system, infringe one or more of claims 1-24 of the ’133 Patent. (Compl. ¶18, p. 6). The central infringement theory is that these inverters are designed to be installed in a "daisy-chaining design," which involves connecting the AC output of one inverter to the AC input of the next. (Compl. ¶11). A system comprising multiple such inverters is alleged to practice the systems recited in the patent’s independent claims. (Compl. ¶18, ¶23; ’133 Patent, cl. 1, 5, 9). The complaint states that detailed support for these allegations is found in an Exhibit B, which was not filed with the public version of the amended complaint. (Compl. ¶19).

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

  • The Term: "daisy chain"

    • Context and Importance: This term appears in the independent claims (e.g., ’133 Patent, cl. 1(b)) and is also used in the complaint to describe the accused functionality (Compl. ¶11). The definition of what constitutes a "daisy chain" connection will be fundamental to the infringement analysis. Practitioners may focus on this term because the entire infringement theory rests on whether the accused systems are connected in this manner.
    • Intrinsic Evidence for a Broader Interpretation: The specification describes the connection as the "AC output port of a smart power inverter" connecting to the "AC input port of the next smart power inverter" and notes that the "actual connection...is pass-through," with power from each inverter being "added in parallel onto the AC powerline." (’133 Patent, col. 3:52-64). This could support an interpretation that covers any series of parallel AC-side connections between individual inverter units.
    • Intrinsic Evidence for a Narrower Interpretation: The patent figures consistently depict a direct, sequential, physical wiring from the housing of one inverter to the housing of the next. (’133 Patent, Fig. 3, 4, 5). This could support a narrower construction requiring this specific physical topology, as distinguished from a configuration where each inverter connects to a common bus or trunk cable.

  • The Term: "AC power input port" and "AC power output port"

    • Context and Importance: These limitations in the independent claims define the physical structures that enable the "daisy chain" functionality. The infringement analysis will depend on whether the accused inverters have distinct structures that meet these definitions. Practitioners may focus on these terms to determine if there is a structural correspondence between the claims and the accused devices.
    • Intrinsic Evidence for a Broader Interpretation: The specification does not provide an explicit definition for these ports beyond their function of receiving or sending AC power, which could support a broad reading to cover any suitable connector or terminal.
    • Intrinsic Evidence for a Narrower Interpretation: The patent drawings depict the input port (51) and output port (52) as physically separate structures on the inverter housing. (’133 Patent, Fig. 3). This may support an argument that the claims require two distinct physical ports, as opposed to a single connector or a T-junction on a trunk cable that performs both functions.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges both inducement and contributory infringement. The inducement claim is based on allegations that Defendant "actively encouraged or instructed" customers on how to construct and use the allegedly infringing systems, with knowledge of the patent "from at least the date of the lawsuit filing." (Compl. ¶20). The contributory infringement claim alleges Defendant's inverters are a material component for practicing the invention. (Compl. ¶21). Plaintiff reserves the right to amend its pleading to allege pre-suit knowledge after discovery. (Compl. ¶20, fn. 1).
  • Willful Infringement: The willfulness allegation is primarily based on Defendant’s alleged continuation of infringing sales after June 30, 2023, the date the prior settlement agreement's license to sell off inventory expired. (Compl. ¶11, ¶22). The complaint asserts that these post-deadline sales are unlicensed and willful, and further alleges that Defendant was directly informed of this breach but continued its conduct. (Compl. ¶12, ¶22).

VII. Analyst’s Conclusion: Key Questions for the Case

  1. Breach of Contract and Estoppel: A threshold issue, potentially dispositive of certain damages and willfulness claims, will be one of contract law: did Defendant’s sales after June 30, 2023, violate the terms of the October 19, 2022 settlement agreement? The resolution of this claim will likely frame the subsequent patent infringement dispute.

  2. Claim Construction and Infringement: A core patent issue will be one of definitional scope: can the term "daisy chain," as described in a patent focused on sequentially-wired inverters, be construed to read on the specific connection architecture of Defendant’s accused BDM-600 and BDM-800 systems? The case may turn on whether the accused products possess distinct "AC power input" and "AC power output" ports as required by the claims.

  3. Willfulness and Subjective Intent: A key evidentiary question will be one of egregiousness: given the history of prior litigation and a settlement agreement that explicitly identified the products and patent, does Defendant’s alleged decision to continue sales after the license deadline, despite being notified of the alleged breach, rise to the level of objective recklessness required for a finding of willful infringement?