DCT

2:24-cv-00092

NextGen Innovations LLC v. Cisco Systems Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:24-cv-00092, E.D. Tex., 02/09/2024
  • Venue Allegations: Plaintiff alleges venue is proper because Defendant is registered to do business in Texas, has transacted business in the district, and maintains regular and established places of business in Richardson, Texas.
  • Core Dispute: Plaintiff alleges that Defendant’s pluggable optical transceiver modules infringe three patents related to high-speed communication techniques in fiber optical networks.
  • Technical Context: The technology at issue involves advanced modulation and signal processing methods designed to increase the data-carrying capacity and range of fiber optic communication systems, which are foundational to modern internet infrastructure.
  • Key Procedural History: The complaint alleges that Defendant has been aware of the Asserted Patents and their likely infringement since at least August 9, 2022, when Plaintiff filed a lawsuit against Defendant’s customers (including AT&T and Infinera) asserting the same patents. The complaint further alleges that one or more of those defendants submitted indemnity requests to Cisco, and that Cisco has been involved in that defense.

Case Timeline

Date Event
2003-06-10 Earliest Priority Date for Asserted Patents
2003-09-01 Sotos founded UBI Systems, Inc. (approximate)
2005-04-01 iPON began working with AT&T (approximate)
2005-05-01 Sotos founded iPON Systems, Inc. (approximate)
2005-07-01 iPON approached Alcatel-Lucent's Internet Products Division (approximate)
2007-08-01 iPON, Alcatel-Lucent, and Finisar agreed to a lab trial (approximate)
2018-02-06 U.S. Patent No. 9,887,795 Issued
2018-10-01 NextGen Innovations, LLC formed (approximate)
2019-04-16 U.S. Patent No. 10,263,723 Issued
2020-09-08 U.S. Patent No. 10,771,181 Issued
2022-08-09 Plaintiff filed prior case against Defendant's customers
2024-02-09 Complaint Filing Date

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

U.S. Patent No. 9,887,795 - System And Method For Performing High-Speed Communications Over Fiber Optical Networks, Issued Feb. 6, 2018

The Invention Explained

  • Problem Addressed: The patent describes how the performance of fiber optic networks is fundamentally constrained by physical phenomena. Specifically, it notes that amplitude degradation and "temporal distortions" (such as chromatic and modal dispersion) limit both the maximum data rate and the maximum transmission distance ("reach") of optical signals (Compl. ¶26; ’795 Patent, col. 1:47-2:4). These distortions become a greater constraint as transmission frequency increases (Compl. ¶26; ’795 Patent, col. 2:2-4).
  • The Patented Solution: The invention proposes a combination of techniques to overcome these physical limits. The core concept is to use "m-ary modulation" to increase the number of bits transmitted per symbol, which allows for higher data throughput at a given line rate. This is combined with "channel equalization" to reduce the effects of temporal distortions, and demultiplexing across multiple fibers to further increase aggregate throughput (Compl. ¶26; ’795 Patent, col. 6:1-15). The patent specification depicts a transceiver architecture implementing these functions, including coders, modulators (MOD), and equalization (EQ) blocks (e.g., ’795 Patent, Fig. 3).
  • Technical Importance: By increasing the bits-per-symbol, this approach allows network operators to increase total data throughput without necessarily increasing the raw transmission frequency (the line rate), thereby mitigating the frequency-dependent distortions that limit performance (Compl. ¶27; ’795 Patent, col. 6:20-26).

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 (Compl. ¶28).
  • Claim 1 (Method):
    • Receiving a first electrical binary data signal through a system interface of a pluggable optical transceiver module;
    • Converting this signal to a first electrical m-ary modulation signal;
    • Amplifying the signal to drive an optical transmitter;
    • Emitting a first optical signal on a first wavelength;
    • Receiving a second optical signal on a second wavelength;
    • Producing an electrical signal from the received optical signal;
    • Recovering clock data information to produce a second m-ary modulation signal;
    • Demodulating the second m-ary signal to a second electrical binary data signal; and
    • Transmitting the second binary data signal through the system interface.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 10,263,723 - System And Method For Performing High-Speed Communications Over Fiber Optical Networks, Issued Apr. 16, 2019

The Invention Explained

  • As a continuation of the application that led to the ’795 patent, this patent addresses the same technical problems and discloses similar solutions (Compl. ¶38). The explanation of the problem, solution, and technical importance provided for the ’795 patent is also applicable here.

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 (Compl. ¶39).
  • Claim 1 (Apparatus): A "pluggable optical transceiver module" comprising a sequence of components:
    • an electrical system interface;
    • an encoder unit for coding a data signal with an error correcting code;
    • an m-ary modulator for increasing bits per symbol;
    • a digital to analog converter (DAC);
    • a driver;
    • an optical transmitter;
    • an optical detector;
    • an amplifier;
    • a clock data recovery (CDR) unit;
    • an equalizer to remove noise;
    • an m-ary demodulator for decreasing bits per symbol; and
    • a decoder unit for decoding the error correcting code.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 10,771,181 - System And Method For Performing High-Speed Communications Over Fiber Optical Networks, Issued Sep. 8, 2020

  • Technology Synopsis: This patent is a continuation of the applications that led to the ’795 and ’723 patents and contains the same core teachings (Compl. ¶49). It discloses systems and methods for improving the performance of fiber optic networks by using techniques like m-ary modulation and equalization to overcome physical signal degradation and distortion (Compl. ¶26, ¶49).
  • Asserted Claims: The complaint asserts at least independent claim 1 (Compl. ¶50).
  • Accused Features: The accused features are pluggable optical transceiver modules, such as those using the CFP2-DCO format, which are alleged to embody the claimed invention (Compl. ¶50).

III. The Accused Instrumentality

Product Identification

The complaint identifies the accused products as "pluggable optical transceiver modules using formats such as CFP2-DCO" (Compl. ¶28, ¶39, ¶50). The complaint does not name specific Cisco product models but focuses on the functionality inherent in this class of device.

Functionality and Market Context

The complaint alleges these products are components used in high-speed optical networking systems (Compl. ¶2, ¶26). Functionally, they are alleged to perform the entire sequence of signal conversions claimed in the asserted patents: receiving electrical data, encoding and modulating it using m-ary techniques for optical transmission, and performing the reverse process for received optical signals (Compl. ¶31, ¶42, ¶53). The complaint alleges these products are sold and imported by Cisco (Compl. ¶28).

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint states that claim charts are attached as Exhibits B, D, and F, but these exhibits were not included in the filed document. The following analysis is based on the narrative allegations of infringement.

’795 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
a method for m-ary modulation communication by a pluggable optical transceiver module comprising of: receiving a first electrical binary data signal through a system interface... The complaint alleges Cisco's modules, such as CFP2-DCO modules, receive electrical data signals for transmission. ¶28, ¶31 col. 9:11-15
converting the first electrical binary data signal...to a first electrical m-ary modulation signal; The accused modules are alleged to convert binary data into a complex, multi-bit-per-symbol modulation format for optical transmission. ¶28, ¶31 col. 10:10-20
amplifying the first electrical m-ary modulation signal to drive an optical transmitter... The accused modules are alleged to contain drivers that amplify the modulated electrical signal to operate a laser. ¶28, ¶31 col. 10:30-34
emitting a first optical signal on a first wavelength... The accused modules are alleged to contain a laser or other optical transmitter that sends the modulated light signal over a fiber. ¶28, ¶31 col. 10:34-39
receiving a second optical signal on a second wavelength and producing an electrical signal from an optical detector... The accused modules are alleged to contain a photodetector to receive an incoming optical signal and convert it to an electrical signal. ¶28, ¶31 col. 10:40-49
recovering a clock data information from the amplified electrical signal to produce a second m-ary modulation signal... The accused modules are alleged to contain Clock Data Recovery (CDR) and Equalization (EQ) circuitry. ¶28, ¶31 col. 10:50-54
demodulating the second m-ary modulation signal to a second electrical binary data signal... The accused modules are alleged to perform the complementary demodulation process to convert the received signal back to binary data. ¶28, ¶31 col. 10:60-67

’723 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A pluggable optical transceiver module comprising of: an electrical system interface for receiving a first electrical data signal and for transmitting a second electrical data signal... The accused CFP2-DCO modules are alleged to have an electrical interface to connect to host networking equipment. ¶39, ¶42 col. 9:11-20
an encoder unit for coding the first electrical data signal according to an error correcting code... The accused modules are alleged to contain circuitry that performs forward error correction (FEC) encoding. ¶39, ¶42 col. 9:50-60
an m-ary modulator for increasing the number of bits per symbol in the equalized...signal to produce a first m-ary modulation signal... The accused modules are alleged to use m-ary modulation techniques like Quadrature Amplitude Modulation (QAM) to increase data density. ¶39, ¶42 col. 10:10-20
...an optical transmitter...an optical detector...an amplifier...a clock data recovery unit...an equalizer...an m-ary demodulator...a decoder unit... The complaint alleges the accused CFP2-DCO modules contain the full chain of corresponding hardware components to perform these functions. ¶39, ¶42 col. 10:21-11:1

Identified Points of Contention

  • Technical Questions: A primary question will be evidentiary: what specific proof can Plaintiff offer that the accused Cisco "CFP2-DCO" modules practice each claimed function or contain each claimed component? The complaint asserts this functionality at a high level, but the case will depend on detailed technical analysis of the accused products' hardware and digital signal processors (DSPs).
  • Scope Questions: The case may involve a dispute over whether the specific type of modulation and equalization used in Cisco's products falls within the scope of the claims. For example, a question for the court could be: "Does the term equalizer...to remove noise as recited in claim 1 of the '723 patent read on the specific digital signal processing algorithms implemented in the accused products' DSPs?"

V. Key Claim Terms for Construction

  • The Term: "m-ary modulation"

  • Context and Importance: This term appears in the independent claims of all asserted patents and is central to the invention's core concept of increasing data density. The dispute will likely focus on whether the specific modulation schemes used by Cisco's accused products (e.g., specific variants of QAM) fall within the patent's definition of this term. Practitioners may focus on this term because its construction will define the breadth of technologies covered by the patents.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification provides a non-exhaustive list of examples, stating an m-ary modulation method such as QAM, PAM, QPSK, or OFDM is used, suggesting the term is not limited to only those examples (’723 Patent, col. 10:13-20).
    • Evidence for a Narrower Interpretation: A defendant might argue that the term should be limited by the specific embodiments and figures, which show particular architectural arrangements for implementing these modulation schemes (e.g., ’723 Patent, Fig. 3).

  • The Term: "pluggable optical transceiver module"

  • Context and Importance: This is the preamble of the apparatus claim of the ’723 patent. Its construction is critical for determining the universe of accused products. Practitioners may focus on this term because it links the claimed invention to established industry form factors.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The term itself is general. Plaintiff may argue it should be given its plain and ordinary meaning, covering any transceiver module that can be plugged into a host system.
    • Evidence for a Narrower Interpretation: The specification explicitly states that the modules "can conform to a form factor of standard optical modules such as the 300pin, XENPAK, X2, XPAK, XFP or SFP and SFP+" (’723 Patent, col. 11:25-29). A defendant may argue this list limits the scope of the term to these or similar industry-standard form factors. The accused "CFP2-DCO" format is a recognized standard, which may fall within this scope.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that Cisco induces infringement by providing "online customer-focused materials" that "actively encourage and instruct" customers and end users on how to use the accused products in an infringing manner (Compl. ¶29, ¶40, ¶51).
  • Willful Infringement: Willfulness is alleged based on Cisco’s purported knowledge of the asserted patents since at least August 9, 2022. This knowledge is alleged to stem from a prior lawsuit Plaintiff filed against Cisco's customers (AT&T, Infinera) where the same patents were asserted against products allegedly supplied by Cisco. The complaint further alleges that Cisco received indemnity requests and was involved in defending its customers in that prior case (Compl. ¶22, ¶29).

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

  • A central issue will be one of evidentiary proof: Can Plaintiff produce technical evidence to demonstrate that the internal operations of Cisco's accused CFP2-DCO modules, particularly the functions performed by their complex digital signal processors (DSPs), map onto each element of the asserted method and apparatus claims?
  • A second key question will be one of claim scope: How broadly will the court construe the term "m-ary modulation"? The outcome will determine whether the specific, advanced modulation schemes used in modern coherent optics are encompassed by the patent's disclosure, which dates to a 2003 priority filing.
  • Finally, a critical legal question will be willfulness: Do the allegations regarding Cisco's knowledge of and involvement in the prior litigation against its customers establish pre-suit knowledge of infringement sufficient to support a finding of willful infringement, potentially leading to enhanced damages?