Realtime Data LLC v. Datto Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Realtime Data LLC d/b/a IXO (New York)
  • Defendant: Datto, Inc. (Delaware)
  • Plaintiff’s Counsel: Bayard, P.A.; Russ August & Kabat
• Case Identification: 1:18-cv-01197, D. Del., 08/07/2018
• Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant Datto, Inc. is a Delaware corporation, has transacted business in the district, and has allegedly committed acts of infringement within the district.
• Core Dispute: Plaintiff alleges that Defendant’s data backup, storage, and disaster recovery products infringe four patents related to adaptive data compression and accelerated data storage.
• Technical Context: The technology concerns systems and methods for efficiently compressing and storing large volumes of data by analyzing data content and selecting appropriate compression techniques to increase speed and reduce storage requirements, a critical function in the data backup and disaster recovery market.
• Key Procedural History: The complaint notes that numerous claims of U.S. Patent No. 9,116,908, one of the patents-in-suit, were confirmed as patentable in a Final Written Decision by the Patent Trial and Appeal Board on October 31, 2017, a fact that may be raised to underscore the patent's validity during litigation.

Case Timeline

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

U.S. Patent No. 9,054,728 - Data compression systems and methods (Issued June 9, 2015)

The Invention Explained

• Problem Addressed: The patent's background describes the inefficiency of using a single lossless data compression technique for data streams with varying content and data sizes, noting that such an approach can lead to suboptimal compression or even data expansion (’728 Patent, col. 2:35-50).
• The Patented Solution: The invention proposes an adaptive system that first analyzes a data block to identify its parameters or attributes, excluding analysis based solely on a descriptor. Based on this analysis, the system decides whether to apply one of several "content dependent" data compression encoders or to use a single, different data compression encoder if specific attributes are not identified ('728 Patent, Abstract). This creates a two-path system for optimizing compression based on the nature of the data itself ('728 Patent, col. 11:15-13:10; Fig. 13A).
• Technical Importance: The technology provides a method for automatically selecting an appropriate compression scheme for a given block of data, which can improve storage efficiency and data transfer speeds in systems handling diverse data types.

Key Claims at a Glance

• The complaint asserts independent Claim 1 (Compl. ¶9).
• The essential elements of Claim 1 include:
  • A system comprising a processor, one or more content dependent data compression encoders, and a single data compression encoder.
  • The processor is configured to analyze data within a data block to identify parameters or attributes, where the analysis excludes being based solely on a descriptor.
  • The processor is configured to perform content dependent data compression with the content dependent encoders if parameters or attributes are identified.
  • The processor is configured to perform data compression with the single data compression encoder if parameters or attributes are not identified.
• The complaint reserves the right to assert other claims (Compl. ¶18).

U.S. Patent No. 9,667,751 - Data feed acceleration (Issued May 30, 2017)

The Invention Explained

• Problem Addressed: The patent identifies the performance limitations of memory storage devices, noting that even with high-speed interconnects, the read/write data rates of disk drives create a bottleneck (’751 Patent, col. 1:19-32).
• The Patented Solution: The invention describes a data server that accelerates data storage by compressing data faster than it could be stored in uncompressed form. The server analyzes a data block's content, selects an appropriate encoder, compresses the data using a "state machine," and then stores the compressed block, with the total time for compression and storage being less than the time it would have taken to simply store the original block ('751 Patent, Abstract). The use of a state machine suggests a system where the compression decision or method depends on the current state or previously processed data ('751 Patent, Fig. 2).
• Technical Importance: This approach aims to reduce latency in data-intensive operations like backups by making the compression and storage process more efficient than writing raw data directly to a disk.

Key Claims at a Glance

• The complaint asserts independent Claim 25 (Compl. ¶25).
• The essential elements of Claim 25 include:
  • A data server with one or more processors and memory systems.
  • The server is configured to analyze the content of a data block to identify a parameter, attribute, or value, excluding analysis based solely on a descriptor.
  • The server is configured to select an encoder associated with the identified parameter, attribute, or value.
  • The server is configured to compress the data block with the selected encoder, wherein the compression utilizes a state machine.
  • The server is configured to store the compressed data block.
  • The total time for compressing and storing the data block is less than the time for storing the data block in uncompressed form.
• The complaint reserves the right to assert other claims (Compl. ¶35).

U.S. Patent No. 7,415,530 - System and methods for accelerated data storage and retrieval (Issued August 19, 2008)

• Technology Synopsis: The patent addresses the bandwidth limitations of memory storage devices (’530 Patent, col. 1:21-34). The proposed solution is a "data accelerator" that compresses an incoming data stream containing multiple data blocks by using a first compression technique on a first block and a different, second compression technique on a second block, with the overall compression and storage process being faster than storing the data stream in its original form ('530 Patent, Abstract). The system also stores a descriptor indicating the compression technique used to facilitate decompression.
• Asserted Claims: The complaint asserts independent Claim 1 (Compl. ¶44).
• Accused Features: The complaint alleges that Datto’s use of the ZFS file system, which employs both deduplication and LZJB compression on data blocks, infringes this patent (Compl. ¶¶51-52).

U.S. Patent No. 9,116,908 - System and methods for accelerated data storage and retrieval (Issued August 25, 2015)

• Technology Synopsis: This patent is from the same family as the '530 patent and addresses the same technical problem of storage device bottlenecks ('908 Patent, col. 1:21-34). The solution is nearly identical, describing a data accelerator that compresses a first data block with a first technique and a second data block with a different second technique, where the combined compression and storage is faster than storing the uncompressed blocks ('908 Patent, Abstract).
• Asserted Claims: The complaint asserts independent Claim 1 (Compl. ¶66).
• Accused Features: The complaint accuses Datto’s ZFS-based systems, which allegedly use different compression techniques (e.g., deduplication and another compression like LZJB), of infringing this patent (Compl. ¶67).

III. The Accused Instrumentality

Product Identification

• The accused instrumentalities include Datto's SIRIS, ALTO, Datto Nas, Datto Drive, and Datto Cloud for DRaaS products and services, as well as the associated hardware (Compl. ¶8). The complaint provides a visual of the specifications for a "SIRIS 3 X 4 Professional" device, identifying its processor as a "Xenon D 1541" (Compl. ¶12).

Functionality and Market Context

• The complaint alleges that the accused products provide data backup and storage solutions (Compl. ¶¶13, 15). The core of the infringement allegation centers on Datto's use of the Zettabyte File System (ZFS) for storage (Compl. ¶¶13, 15). The complaint alleges that ZFS performs "block-level deduplication" as well as "ZFS LZJB compression" to reduce the amount of stored data (Compl. ¶¶13, 14). It is also alleged that the products offer "incremental backups" that "effectively deduplicate the base image from every backup, using the inverse chain method" (Compl. ¶13). The complaint cites Datto's marketing materials, which tout features such as "inline data compression, variable-length blocks, and inline block deduplication" (Compl. ¶11).

IV. Analysis of Infringement Allegations

'908 Patent Infringement Allegations

'751 Patent Infringement Allegations

Identified Points of Contention

• Scope Questions: A central question may be whether "block-level deduplication," which typically involves replacing a redundant data block with a pointer to a single stored copy, constitutes "data compression" performed by an "encoder" as those terms are understood in the context of the patents. The analysis may focus on whether the patent specifications contemplate this specific form of data reduction or are limited to algorithmic transformations of data like Huffman or Lempel-Ziv encoding.
• Technical Questions: For the ’728 Patent, the dispute may turn on the specific logic of the accused ZFS system. The complaint alleges a binary choice: if data is duplicative, deduplicate; if not, use LZJB compression. The question for the court will be whether this operational logic directly maps onto the claimed steps of "analyzing...to identify...parameters," and then selecting one of two distinct compression paths based on whether those parameters "are identified" or "are not identified." For the '751 Patent, a factual question will be what evidence supports the allegation that the accused products' compression "utilizes a state machine," a term for which the complaint provides a conclusory allegation without detailed technical support.

V. Key Claim Terms for Construction

For the ’728 Patent:

• The Term: "content dependent data compression encoder"
• Context and Importance: This term is critical to the infringement theory. The complaint alleges that "block-level deduplication... is a content dependent data compression encoder" (Compl. ¶13). The viability of the infringement case for multiple asserted patents depends on whether deduplication falls within the scope of this term as construed by the court. Practitioners may focus on this term because its definition will determine whether Datto's use of deduplication can meet a key limitation of the asserted claims.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The '728 Patent specification states that the invention is not limited to the specific encoders disclosed and that "any of those lossless encoding techniques currently well known within the art" may be used, which could support an argument for a broad definition of "encoder" (col. 11:43-51).
  • Evidence for a Narrower Interpretation: The specification explicitly lists examples of encoding techniques such as "run length, Huffman, Lempel-Ziv Dictionary Compression, arithmetic coding, data compaction, and data null suppression" (col. 11:43-51). An argument could be made that this list suggests a narrower class of algorithmic data transformations, distinct from the process of identifying and replacing duplicate blocks.

For the ’751 Patent:

• The Term: "wherein the compression utilizes a state machine"
• Context and Importance: This limitation requires a specific mode of operation for the compression process. The complaint makes a conclusory allegation that the accused ZFS system uses a state machine but does not explain how (Compl. ¶32). The outcome of this claim element will depend entirely on the technical evidence presented regarding the inner workings of ZFS and whether its logic constitutes a "state machine" as defined by the patent.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The term "state machine" is not explicitly defined, which may support an argument for its plain and ordinary meaning, potentially covering any system where outputs depend on a sequence of inputs or internal states.
  • Evidence for a Narrower Interpretation: The detailed description of the '751 Patent references a "dedicated finite state machine" as one possible hardware implementation for its high-speed compression algorithms (col. 4:50-51). This could be used to argue that the patent contemplates a more formal and specific hardware or software structure than the general decision-making logic of a file system.

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement for all four patents. The allegations are based on Defendant's promotional activities, such as touting performance advantages on its website, and providing "user manuals, product support, marketing materials, and training materials" that allegedly instruct customers to use the accused products in an infringing manner (Compl. ¶¶11, 27, 44, 66).
• Willful Infringement: The complaint alleges that Defendant has had knowledge of the patents-in-suit "since at least the filing of the original Complaint in this action, or shortly thereafter" (Compl. ¶¶10, 26, 43, 65). This allegation supports a theory of post-suit willful infringement.

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

• A core issue will be one of definitional scope: can "deduplication," a technique of eliminating redundant data blocks, be construed as compression performed by a "content dependent data compression encoder" as described in the patent specifications, which primarily cite algorithmic methods like Huffman and Lempel-Ziv? The case may hinge on whether the court views deduplication as a form of "encoding" or as a distinct data reduction technique.
• A second central question will be one of functional mapping: does the operational logic of the accused ZFS file system, which chooses between deduplication and LZJB compression, perform the specific, two-path conditional process claimed in the '728 Patent? This will require an evidentiary deep dive into how ZFS analyzes data and makes decisions, to determine if there is a direct correspondence with the claim language or a fundamental mismatch in technical operation.
• Finally, for the '530 and '908 patents, a key question will be one of technical differentiation: does the use of deduplication alongside a separate algorithm like LZJB compression constitute the use of two "different" compression techniques on distinct data blocks as required by the claims, or are they applied in a manner that falls outside the claimed method?