DCT

2:23-cv-00397

Headwater Research LLC v. AT&T Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:23-cv-00397, E.D. Tex., 09/16/2025
  • Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant AT&T conducts extensive business in the district, maintains a regular and established place of business, and sells the accused products and services to consumers there.
  • Core Dispute: Plaintiff alleges that Defendant’s mobile electronic devices and associated cellular networks and services infringe two patents related to device-assisted management of network data traffic and capacity.
  • Technical Context: The technology addresses the management of exponential growth in mobile data demand by using software on end-user devices to intelligently control how applications access wireless network resources.
  • Key Procedural History: The complaint details a pre-suit history beginning in 2009, alleging that Plaintiff's licensee, ItsOn Inc., disclosed proprietary technology and patent information to AT&T under a non-disclosure agreement for a potential partnership. Plaintiff alleges that AT&T subsequently chose not to partner and instead developed its own infringing solutions based on the disclosed information. These allegations form the basis for claims of willful infringement.

Case Timeline

Date Event
2009-01-20 ItsOn and AT&T enter into a non-disclosure agreement (NDA) and meet.
2009-03-02 Earliest priority date for the '541 and '613 Patents.
2009-07-07 ItsOn provides AT&T with information on its patent portfolio.
2010-05-03 Date of an internal AT&T presentation allegedly proposing a replacement for ItsOn's solution.
2011-08-01 ItsOn and AT&T personnel meet again to discuss a potential relationship (approximate date).
2013-11-19 U.S. Patent No. 8,589,541 issues.
2015-12-15 U.S. Patent No. 9,215,613 issues.
2025-09-16 Complaint filed.

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

U.S. Patent No. 8,589,541 - "Device-assisted services for protecting network capacity," issued November 19, 2013

The Invention Explained

  • Problem Addressed: The patent background describes a "network capacity crunch" driven by the increasing popularity of smartphones and other mobile devices, which consume significant network resources and can degrade overall network performance for all users ('541 Patent, col. 10:55-68).
  • The Patented Solution: The invention proposes a "Device Assisted Services" (DAS) system where software on the end-user device monitors "service usage activity" (e.g., application data requests) ('541 Patent, Abstract). This on-device software classifies the activity, determines if it is a "background activity," and applies a service control policy to manage its network access, particularly when the network is busy. This approach shifts some network management intelligence from the network core to the device edge ('541 Patent, Fig. 14).
  • Technical Importance: This device-centric approach allows for more granular and real-time control over network resources than purely network-based solutions, which may lack detailed insight into on-device application behavior ('541 Patent, col. 16:5-15).

Key Claims at a Glance

The complaint asserts infringement of at least independent claim 1 (Compl. ¶58).

  • Independent Claim 1 is directed to a non-transitory computer-readable storage medium with instructions for a processor on a wireless device to perform steps including:
    • Identifying a service usage activity of the wireless end-user device;
    • Determining, from the service usage activity, the policy to be applied;
    • Determining an aspect of the policy based on user input or information from a network element;
    • Wherein the policy is for controlling the service usage activity; and
    • If it is determined the service usage activity is a background activity, applying the policy.

U.S. Patent No. 9,215,613 - "Wireless end-user device with differential traffic control policy list having limited user control," issued December 15, 2015

The Invention Explained

  • Problem Addressed: Like the '541 patent, this invention addresses the need to manage network traffic in capacity-constrained wireless environments like Wi-Fi and cellular networks ('613 Patent, col. 1:10-21).
  • The Patented Solution: The patent describes a wireless device with one or more processors that use a "differential traffic control policy list" to manage network access for different applications ('613 Patent, Abstract). A key aspect is that the user is explicitly "allowed to augment the policy" for a first set of specified applications but is not allowed to do so for a second set, creating a hybrid control system where the network operator maintains ultimate control over certain applications while giving the user limited flexibility over others ('613 Patent, Abstract; col. 106:5-9).
  • Technical Importance: This invention provides a framework for balancing the network operator's need to protect network integrity with the user's desire for control over their device's functionality.

Key Claims at a Glance

The complaint asserts infringement of at least independent claim 1 (Compl. ¶71).

  • Independent Claim 1 is directed to a wireless end-user device comprising a WWAN modem, a WLAN modem, memory, a user interface, and processors configured to perform steps including:
    • Storing a policy list that distinguishes a first set of applications from a second set of applications/services;
    • Allowing a user to augment a traffic control policy for the first set of applications but not the second;
    • Classifying the network type (e.g., WWAN);
    • Classifying whether an application is interacting with a user in the foreground; and
    • Selectively allowing or denying Internet service activities for an application based on the policy list, user augmentation, network type, and foreground/background status.

III. The Accused Instrumentality

Product Identification

The complaint identifies the Accused Instrumentalities broadly as "mobile electronic devices, including mobile phones and tablets used, offered for sale, sold, and/or imported by Defendants...as well as cellular networks, servers, and services" (Compl. ¶15).

Functionality and Market Context

The complaint alleges that AT&T, a major U.S. carrier, provides devices and services that include features for managing data usage and network access (Compl. ¶31). The complaint does not specify the names of these features but asserts they incorporate the patented technologies to cope with the massive growth in mobile data traffic (Compl. ¶¶ 11-13). To underscore this market context, the complaint provides a line graph from Ericsson showing the exponential growth of mobile data traffic from 2011 to a projected 282 exabytes/month in 2027 (Compl. p. 6). The complaint also points to AT&T's large subscriber base of over 196 million as of March 2022 to establish the scale of the alleged infringement (Compl. ¶45).

IV. Analysis of Infringement Allegations

The complaint alleges infringement of claim 1 of the '541 Patent and claim 1 of the '613 Patent, stating that claim charts are provided in Exhibits 3 and 4, respectively (Compl. ¶¶55, 68). As these exhibits were not included with the complaint, a tabular analysis cannot be performed. The narrative infringement theory is summarized below.

The complaint's central infringement theory is that the "normal and customary use" of AT&T's mobile devices and network services practices the methods and systems claimed in the Asserted Patents (Compl. ¶¶58, 71). The complaint does not identify a specific software feature by name but alleges that AT&T's devices contain functionality for monitoring application data usage, classifying it (e.g., as background activity), and applying network access policies to manage capacity. This functionality is alleged to read on the "device-assisted services" of the '541 Patent. The complaint further alleges that this functionality includes a system of differential traffic rules with limited user-override capabilities, which is alleged to read on the "differential traffic control policy list having limited user control" of the '613 Patent. A screenshot of an AT&T wireless coverage map shows advertised 5G and 4G LTE coverage in Marshall, Texas, within the Eastern District, which Plaintiff uses to support its allegation of infringing acts within the district (Compl. p. 12).

V. Key Claim Terms for Construction

’541 Patent

The Term: "background activity"

  • Context and Importance: Claim 1 is triggered only if a "service usage activity" is determined to be a "background activity." The definition of this term will be central to determining whether the accused functionality on AT&T devices, such as OS updates or application data syncs that occur when a device is idle, falls within the claim's scope.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification provides a lengthy, non-exclusive list of activities that can be classified as background services, including "firmware update," "software update," "device backup connection," and "a sync service," suggesting the term covers a wide range of non-user-facing processes ('541 Patent, col. 19:20-29).
    • Evidence for a Narrower Interpretation: The patent's abstract distinguishes between a "foreground activity" and a "background activity," which may suggest a mutually exclusive, binary classification. A party could argue that an activity is only "background" if it is entirely non-interactive and occurs when no other application is in the foreground.

’613 Patent

The Term: "augment the policy"

  • Context and Importance: The claim requires an interface that allows a user to "augment the policy" for certain applications. The meaning of "augment" will be critical to the infringement analysis. Practitioners may focus on this term because its interpretation will determine what level of user interaction—from a simple one-time permission to a detailed configuration—satisfies this limitation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The general meaning of "augment" (to make something greater by adding to it) could support a reading where any user action that modifies the default policy, such as selecting an "allow once" option on a notification, constitutes augmentation.
    • Evidence for a Narrower Interpretation: The specification describes the user interface providing an "opportunity to specify what level of QoS the user would like to employ for one or more service usage activities," which could support a narrower definition requiring more granular control than a simple override ('613 Patent, col. 29:63-65).

VI. Other Allegations

  • Indirect Infringement: The complaint alleges induced infringement, stating that AT&T provides instructions and encouragement to customers to use the accused devices and services in an infringing manner (Compl. ¶¶59, 72).
  • Willful Infringement: The complaint alleges that AT&T had pre-suit knowledge of the Asserted Patents and their corresponding technology. This allegation is based on a series of meetings and disclosures under an NDA between AT&T and Plaintiff's licensee, ItsOn Inc., from 2009 to 2011 (Compl. ¶¶17-29, 56, 69). The complaint further alleges that software provided by ItsOn and installed on AT&T phones between 2013-2016 included a patent marking notice listing patents in the asserted family (Compl. ¶¶56, 69).

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

  • A central issue will be one of technical specificity: given the complaint's general allegations against "mobile electronic devices" and "services," a key evidentiary question will be whether the specific software and network management systems actually implemented by AT&T perform the precise functions of classifying activities as "background" and applying policies with "limited user control" as required by the independent claims.
  • A second core issue will involve definitional scope: can the term "augment the policy," as claimed in the ’613 Patent, be construed to cover the types of data usage warnings or controls offered to AT&T users, or does the claim require a more specific form of user-initiated policy modification?
  • Finally, the case may turn on a question of intent and knowledge: the detailed allegations regarding the pre-suit history between AT&T and Plaintiff's licensee will be central to the willfulness claim, raising the question of whether AT&T's development path was influenced by the technology disclosed under NDA.