DCT
1:13-cv-01835
TQ Delta LLC v. 2Wire Inc
Key Events
Amended Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: TQ Delta, LLC (Delaware)
- Defendant: Pace Americas, LLC (Delaware), Pace plc (United Kingdom), and 2Wire, Inc. (Delaware)
- Plaintiff’s Counsel: Farnan LLP
- Case Identification: 1:13-cv-01835, D. Del., 02/07/2014
- Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendants Pace Americas and 2Wire are incorporated in Delaware and conduct regular business in the district.
- Core Dispute: Plaintiff alleges that Defendants’ Digital Subscriber Line Customer Premise Equipment products infringe a portfolio of twenty-four patents related to various aspects of DSL technology.
- Technical Context: The patents relate to Digital Subscriber Line (DSL) technology, which enables broadband data access over existing copper telephone lines and is a foundational technology for internet and video service delivery.
- Key Procedural History: The Second Amended Complaint alleges that Plaintiff TQ Delta made a good-faith effort to license its DSL patent portfolio to Defendants beginning in July 2013, but that these efforts were frustrated by Defendants’ refusal to enter into an agreement. Plaintiff also notes its willingness to negotiate a license on reasonable and non-discriminatory (RAND) terms for any standard-essential patent claims.
Case Timeline
| Date | Event |
|---|---|
| 1999-11-09 | Priority Date for ’008, ’041, ’627, ’721, ’610, and ’427 Patents |
| 2007-11-06 | U.S. Patent No. 7,292,627 Issued |
| 2008-11-18 | U.S. Patent No. 7,453,881 Issued |
| 2008-11-11 | U.S. Patent No. 7,451,379 Issued |
| 2008-12-30 | U.S. Patent No. 7,471,721 Issued |
| 2009-08-04 | U.S. Patent No. 7,570,686 Issued |
| 2010-11-09 | U.S. Patent No. 7,831,890 Issued |
| 2010-11-16 | U.S. Patent No. 7,835,430 Issued |
| 2010-11-16 | U.S. Patent No. 7,836,381 Issued |
| 2010-11-30 | U.S. Patent No. 7,844,882 Issued |
| 2011-02-15 | U.S. Patent No. 7,889,784 Issued |
| 2011-04-12 | U.S. Patent No. 7,925,958 Issued |
| 2011-07-12 | U.S. Patent No. 7,978,706 Issued |
| 2011-07-12 | U.S. Patent No. 7,979,778 Issued |
| 2011-12-06 | U.S. Patent No. 8,073,041 Issued |
| 2012-01-03 | U.S. Patent No. 8,090,008 Issued |
| 2012-07-10 | U.S. Patent No. 8,218,610 Issued |
| 2012-08-07 | U.S. Patent No. 8,238,412 Issued |
| 2012-09-25 | U.S. Patent No. 8,276,048 Issued |
| 2013-01-15 | U.S. Patent No. 8,355,427 Issued |
| 2013-04-16 | U.S. Patent No. 8,422,511 Issued |
| 2013-04-30 | U.S. Patent No. 8,432,956 Issued |
| 2013-06-11 | U.S. Patent No. 8,462,835 Issued |
| 2013-07-15 | Plaintiff sends first licensing letter to Defendants |
| 2013-07-23 | U.S. Patent No. 8,495,473 Issued |
| 2013-07-31 | Deadline for Defendants' response to first letter |
| 2013-08-06 | Plaintiff sends follow-up licensing letter to Defendants |
| 2013-08-20 | U.S. Patent No. 8,516,337 Issued |
| 2013-08-23 | Deadline for Defendants' response and Plaintiff sends follow-up email |
| 2014-02-07 | Second Amended Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,090,008 - "System and Method for Scrambling the Phase of the Carriers in a Multicarrier Communications System," issued January 3, 2012
The Invention Explained
- Problem Addressed: In multicarrier communication systems like Discrete Multitone Modulation (DMT), which is used in DSL, the transmission signal is a combination of many carrier signals. If the phases of these signals align, it can create a high Peak-to-Average Power Ratio (PAR). A high PAR can cause signal distortion ("clipping") and requires more expensive, power-intensive components in the transmitter (’008 Patent, col. 1:31-2:29).
- The Patented Solution: The invention proposes to "scramble" the phase of the carrier signals before data is modulated onto them. It achieves this by computing a unique phase shift for each carrier signal based on a value—such as a carrier number or a number from a pseudo-random number generator—that is determined independently of the data bits being transmitted. This computed phase shift is added to the carrier's original phase, randomizing the phase relationships between carriers and thereby reducing the PAR of the final transmission signal (’008 Patent, Abstract; col. 2:33-51; FIG. 1).
- Technical Importance: Reducing PAR allows for more efficient power consumption and the use of less complex components in DSL transceivers, which is critical for mass-market customer premise equipment (’008 Patent, col. 2:9-14).
Key Claims at a Glance
- The complaint asserts infringement of one or more claims of the ’008 patent (Compl. ¶21). Independent claim 14 is representative of a system claim.
- Essential elements of Independent Claim 14 include:
- A multicarrier system including a first transceiver using a plurality of carrier signals for modulating a bit stream.
- The transceiver associates each carrier signal with a value determined independently of any bit value of the bit stream, where the value is determined using a pseudo-random number generator.
- The transceiver computes a phase shift for each carrier signal based on this associated value.
- The transceiver combines the computed phase shift with the carrier signal's phase characteristic to substantially scramble the phases of the carriers.
- Multiple scrambled carrier signals are then used by the transceiver to modulate the same bit value.
U.S. Patent No. 8,073,041 - "System and Method for Descrambling the Phase of the Carriers in a Multicarrier Communications System," issued December 6, 2011
The Invention Explained
- Problem Addressed: This patent addresses the receiver-side challenge corresponding to the problem solved by the ’008 Patent. Once a signal has been transmitted with its carrier phases scrambled to reduce PAR, the receiver must be able to correctly descramble and demodulate it to recover the original data (’041 Patent, col. 2:11-29).
- The Patented Solution: The invention describes a receiver system that can demodulate a phase-scrambled signal. The receiver independently determines the same value for each carrier signal that the transmitter used for scrambling (e.g., by using the same pseudo-random number generator and seed). It then computes the corresponding phase shift and uses this information to correctly demodulate the received signal, effectively reversing the scrambling process to recover the transmitted data bits (’041 Patent, Abstract; col. 2:50-62; FIG. 1).
- Technical Importance: This technology enables the practical use of phase-scrambling techniques for PAR reduction by providing a corresponding method for a receiver to accurately interpret such signals, completing the communication link (’041 Patent, col. 4:45-50).
Key Claims at a Glance
- The complaint asserts infringement of one or more claims of the ’041 patent (Compl. ¶27). Independent claim 14 is representative of a system claim.
- Essential elements of Independent Claim 14 include:
- A multicarrier system including a first transceiver using a plurality of carrier signals for receiving a bit stream.
- Each carrier signal is associated with a value determined independently of any bit value of the bit stream, where the value is determined by a pseudo-random number generator.
- A phase shift for each carrier signal is based on the value, and the combining of this phase shift with the original phase characteristic substantially scrambles the phases.
- Multiple phase-shifted and scrambled carrier signals are used by the first multicarrier transceiver to demodulate a same bit value of the received bit stream.
Multi-Patent Capsule: U.S. Patent No. 7,292,627
- Patent Identification: U.S. Patent No. 7292627, "System and Method for Scrambling the Phase of the Carriers in a Multicarrier Communications System," issued November 6, 2007 (Compl. ¶31).
- Technology Synopsis: This patent is an earlier member of the same family as the ’008 and ’041 patents. It addresses the same technical problem of high PAR in multicarrier communication systems and discloses a similar solution of scrambling carrier phases using a value determined independently of the data bits (’627 Patent, Abstract).
- Asserted Claims: The complaint asserts one or more claims (Compl. ¶33).
- Accused Features: Defendants' DSL CPE Products that operate in accordance with the ITU-T VDSL2 (G.993.2) standard are accused of infringement (Compl. ¶32).
Multi-Patent Capsule: U.S. Patent No. 7,471,721
- Patent Identification: U.S. Patent No. 7471721, "System and Method for Scrambling the Phase of the Carriers in a Multicarrier Communications System," issued December 30, 2008 (Compl. ¶37).
- Technology Synopsis: This patent is another member of the same family as the patents above, directed to the same technical problem of high PAR and disclosing a solution of scrambling carrier phases based on a value determined independently of the data bits (’721 Patent, Abstract).
- Asserted Claims: The complaint asserts one or more method claims (Compl. ¶38).
- Accused Features: Defendants' DSL CPE Products that operate in accordance with the ITU-T VDSL2 (G.993.2) standard are accused of infringing by using the products (Compl. ¶38).
III. The Accused Instrumentality
Product Identification
- The complaint identifies the accused instrumentalities as "DSL CPE Products," including gateways, that Defendants make, use, sell, offer for sale, or import (Compl. ¶12).
Functionality and Market Context
- The complaint alleges that the accused products provide broadband access to data networks, such as the Internet, over copper telephone wires (Compl. ¶10). The core technical allegation is that these products operate in accordance with various DSL-related standards, such as ITU-T VDSL2 (G.993.2), ITU-T G.bond (G.998.1, G.998.2), and ITU-T ADSL2 (G.992.3) (Compl. ¶¶ 20, 56, 74). The complaint does not provide further technical details about the specific operation of Defendants' products, instead relying on their compliance with these industry standards as the basis for infringement. No specific allegations regarding the products' market share or commercial importance are made. No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
'8,090,008 Infringement Allegations
| Claim Element (from Independent Claim 14) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A multicarrier system including a first transceiver that uses a plurality of carrier signals for modulating a bit stream... | The accused DSL CPE Products are alleged to be multicarrier systems that modulate bit streams onto carrier signals (Compl. ¶¶ 12, 20). | ¶20 | col. 3:25-50 |
| associating each carrier signal with a value determined independently of any bit value of the bit stream carried by that respective carrier signal... | The accused products are alleged to perform this function as part of their operation under the VDSL2 standard (Compl. ¶20). | ¶20 | col. 4:50-54 |
| ...the value associated with each carrier signal determined using a pseudo-random number generator; | The accused products are alleged to utilize this technique as part of their operation under the VDSL2 standard (Compl. ¶20). | ¶20 | col. 11:1-4 |
| computing a phase shift for each carrier signal based on the value associated with that carrier signal; and | The accused products are alleged to perform this function as part of their operation under the VDSL2 standard (Compl. ¶20). | ¶20 | col. 4:66-5:3 |
| combining the phase shift computed for each respective carrier signal with the phase characteristic of that carrier signal to substantially scramble the phase characteristics... | The accused products are alleged to perform this function as part of their operation under the VDSL2 standard (Compl. ¶20). | ¶20 | col. 4:30-39 |
'8,073,041 Infringement Allegations
| Claim Element (from Independent Claim 14) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A multicarrier system including a first transceiver that uses a plurality of carrier signals for receiving a bit stream... | The accused DSL CPE Products are alleged to be multicar-rier systems that receive and demodulate bit streams (Compl. ¶¶ 12, 26). | ¶26 | col. 12:1-2 |
| each carrier signal is associated with a value determined independently of any bit value of the bit stream carried by that respective carrier signal... | The accused products are alleged to perform this function as part of their operation under the VDSL2 standard (Compl. ¶26). | ¶26 | col. 2:50-53 |
| ...the value associated with each carrier signal determined by a pseudo-random number generator, | The accused products are alleged to utilize this technique as part of their operation under the VDSL2 standard (Compl. ¶26). | ¶26 | col. 12:4-6 |
| a phase shift for each carrier signal is based on...the combining of a phase for each carrier signal with the phase characteristic...to substantially scramble the phases | The accused products are alleged to account for this scrambling during demodulation as part of their operation under the VDSL2 standard (Compl. ¶26). | ¶26 | col. 4:45-50 |
| and multiple carrier signals corresponding to the plurality of phase shifted and scrambled carrier signals are used...to demodulate a same bit value... | The accused products are alleged to perform this function as part of their operation under the VDSL2 standard (Compl. ¶26). | ¶26 | col. 12:13-17 |
Identified Points of Contention
- Evidentiary Question: The primary point of contention appears to be whether compliance with the cited industry standards (e.g., VDSL2) necessarily requires practicing every element of the asserted claims. The complaint does not plead facts showing how the standard maps to the claim limitations, presenting a potential area for dispute over whether the standards can be practiced in a non-infringing manner.
- Scope Question: The infringement theory raises the question of whether the functionality described in the asserted claims is mandatory or merely optional within the VDSL2 standard. A defendant may argue that even if a feature is described in the standard, its implementation in the accused products is not required for compliance and is not performed.
V. Key Claim Terms for Construction
The Term: "substantially scramble" (’008 Patent, cl. 14)
Context and Importance: This term is qualitative and its construction will be critical to defining the scope of infringement. The degree of "scrambling" required to meet this limitation will be a central issue. Practitioners may focus on this term because its potential ambiguity could render it invalid for indefiniteness or, alternatively, give it a scope that may or may not read on the functionality mandated by the VDSL2 standard.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes the goal of scrambling as assuring that "the transmitted data bits are random and, consequently, that the modulation of those bits produces a DMT transmission signal with a Gaussian probability distribution" (’008 Patent, col. 1:53-59). This suggests a broad, functional definition tied to achieving a statistical property.
- Evidence for a Narrower Interpretation: The specification provides specific mathematical equations for computing phase shifts, such as
(N+M) x π/4(’008 Patent, col. 7:20-25). A party might argue that "substantially scramble" should be construed more narrowly to mean the result achieved by applying the types of deterministic scrambling equations disclosed in the patent's embodiments.
The Term: "independently of any bit value" (’008 Patent, cl. 14)
Context and Importance: This limitation is a core inventive concept, distinguishing the claimed method from prior art techniques that might derive scrambling values from the data itself. Infringement will depend on proving that the accused devices use a scrambling value that has no functional dependence on the user data being transmitted.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent repeatedly emphasizes this concept, stating the value is "determined independently of any input bit value carried by that carrier signal" (’008 Patent, Abstract) and is derived from parameters like "a random number generator, a carrier number, a DMT symbol count, a superframe count, and a hyperframe count" (’008 Patent, col. 2:47-50). This language suggests a clear and broad separation from the data payload.
- Evidence for a Narrower Interpretation: The complaint does not provide sufficient detail for analysis of potential arguments for a narrower interpretation.
VI. Other Allegations
Indirect Infringement
- The complaint alleges both induced and contributory infringement for each asserted patent. The inducement allegations are based on Defendants allegedly selling, providing support for, and providing instructions for use of the DSL CPE Products to Internet Service Providers and their customers with the intent to encourage infringement (Compl. ¶21). The contributory infringement allegations state the products are not staple articles of commerce and are especially made or adapted for infringing use (Compl. ¶22).
Willful Infringement
- While not pleaded as a separate count, the complaint alleges that Defendants had knowledge of the patents "at least as of the filing of the Complaint and/or previously at least by willful blindness or otherwise" (Compl. ¶21). This allegation, combined with the recitation of pre-suit licensing negotiations, may form the basis for a later claim of willful infringement (Compl. ¶¶ 13-16). The prayer for relief also seeks a finding that the case is "exceptional" under 35 U.S.C. § 285 (Compl. p. 40, ¶D).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of evidentiary proof: can Plaintiff demonstrate that compliance with the cited DSL standards, such as VDSL2, is sufficient to prove that the accused products practice each and every element of the asserted claims? The case may turn on whether the functionality described in the patents is a mandatory or optional part of the standards.
- A key legal question will be one of claim scope: how will the court construe qualitative terms such as "substantially scramble"? The outcome of claim construction for this term could determine whether the operations required by the relevant standards fall within the patented invention's scope.
- A central dispute will likely involve the effect of pre-suit notice: did the licensing letters sent by Plaintiff provide sufficiently specific notice of infringement to support a claim for willful infringement for any subsequent sales of the accused products? The court will need to evaluate the content and specificity of those communications.