Headwater Research LLC v. AT&T Services Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Headwater Research LLC (Texas)
  • Defendant: AT&T Services, Inc., AT&T Mobility, LLC, and AT&T Enterprises LLC (Delaware, Delaware, New York)
  • Plaintiff’s Counsel: Russ August & Kabat
• Case Identification: 2:25-cv-00685, E.D. Tex., 07/03/2025
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because AT&T has committed acts of infringement in the district, has a regular and established place of business in the district, and conducts extensive business throughout Texas.
• Core Dispute: Plaintiff alleges that Defendant’s cellular networks, servers, eSIM-enabled devices, and related services infringe five patents concerning device-assisted services, network management, and security.
• Technical Context: The technology relates to managing how mobile devices interact with wireless networks, including service provisioning, policy enforcement, and security, a domain critical to the operation of modern cellular systems.
• Key Procedural History: The complaint alleges that the inventor, through his company ItsOn Inc., engaged in detailed discussions with AT&T under a non-disclosure agreement between 2009 and 2011, disclosing the technology and pending patents. Plaintiff alleges AT&T subsequently chose not to partner with ItsOn and instead developed its own infringing systems based on the disclosed information, which may be central to allegations of willful infringement.

Case Timeline

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

U.S. Patent No. 8,797,908 - “Automated Device Provisioning and Activation” (Issued Aug. 5, 2014)

The Invention Explained

• Problem Addressed: The patent describes a need for a communication system and method for obtaining, from a management entity, a service policy to assist in managing network traffic on a device, implying that prior methods of device setup and service activation were complex or required manual configuration (’908 Patent, col. 8:50-57).
• The Patented Solution: The invention discloses a system where a "service processor" on a device communicates with a "service controller" in the network to automate the provisioning and activation of services (’908 Patent, Abstract). This architecture allows for dynamic management of device services and policies, such as identifying and controlling traffic associated with specific activities or services directly from the device in coordination with the network (’908 Patent, Fig. 1).
• Technical Importance: This approach sought to move service intelligence from the core network directly onto the device, enabling more granular and dynamic control over service usage and activation in an era of rapidly growing mobile data consumption (Compl. ¶¶11-13).

Key Claims at a Glance

• The complaint asserts at least independent claim 56 (Compl. ¶57; The complaint references an Exhibit 6 claim chart for infringement of "claim 1," which is likely a typographical error, as the '908 patent's claim 1 is dependent. Claim 56 is the independent claim from which claim 1 ultimately depends).
• Essential elements of independent claim 56 include:
  • A network system comprising a device-group management entity.
  • The device group includes a first device and a second device communicatively coupled to the network system over a wireless network.
  • The device-group policy comprising a classification policy to assist in identifying traffic associated with one or more available service activities.
  • A control policy to assist in controlling at least a portion of the traffic associated with the one or more available service activities.
  • Identifying data traffic over the wireless network associated with the first device based on the classification policy.
  • Controlling at least a portion of the first traffic based on the control policy.
• The complaint does not explicitly reserve the right to assert dependent claims for this patent.

U.S. Patent No. 9,706,061 - “Service Design Center for Device Assisted Services” (Issued July 11, 2017)

The Invention Explained

• Problem Addressed: The patent addresses the cumbersome and rigid process of creating and deploying network service plans for end-user devices, which traditionally required significant manual configuration by carrier employees (’061 Patent, col. 1:15-39).
• The Patented Solution: The invention provides a "service design center" that allows an administrator to create and provision service plans in a modular fashion (’061 Patent, Abstract). This system uses building blocks like "filters" (to identify traffic), "components" (collections of filters), and "rules" (actions to take) that can be assembled into complex service plans and then automatically translated into instructions for network enforcement elements (’061 Patent, Fig. 1).
• Technical Importance: This technology allows for greater flexibility and speed in creating customized and dynamic service plans, enabling new business models for carriers, MVNOs, or enterprise partners who need to manage device usage policies (Compl. ¶14).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 (Compl. ¶65).
• Essential elements of independent claim 1 include:
  • A method for operating a service design system to implement a service plan.
  • Accepting user input defining an event associated with the use of a wireless access network.
  • Accepting user input specifying a plurality of service policies (access, accounting, notification).
  • Creating a service plan definition based on the event and policies.
  • Automatically translating the plan definition into instructions for policy implementation elements to implement the policies when the event is detected.
• The complaint does not explicitly reserve the right to assert dependent claims for this patent.

U.S. Patent No. 10,028,144 - “Security techniques for device assisted services” (Issued July 17, 2018)

• Technology Synopsis: The patent addresses the security risks of managing network services on an end-user device, where malware could interfere with service measurement or control agents (’144 Patent, col. 1:41-50). The solution involves creating separate, secure execution partitions on the device's processor to isolate critical service management agents from general applications, thereby protecting them from tampering (’144 Patent, Abstract; Fig. 1).
• Asserted Claims: At least independent claim 1 (Compl. ¶69).
• Accused Features: The complaint alleges infringement by AT&T's systems that implement security and partitioning techniques for device-assisted services on eSIM-enabled devices and networks (Compl. ¶¶40, 69).

U.S. Patent No. 10,080,250 - “Enterprise access control and accounting allocation for access networks” (Issued Sep. 18, 2018)

• Technology Synopsis: The patent addresses the challenge of billing for wireless device usage when a single device is used for both personal and enterprise purposes (’250 Patent, col. 3:52-4:27). The solution is a system that monitors service usage on a device, determines whether the usage is for enterprise or consumer purposes, and allocates the billing accordingly between the two parties, often managed through a "service design center" (’250 Patent, Abstract; Fig. 1).
• Asserted Claims: At least independent claim 1 (Compl. ¶74).
• Accused Features: The complaint alleges infringement by AT&T's networks and services that provide for enterprise access control and differentiated accounting for cellular usage on devices operating on its network (Compl. ¶¶40, 74).

U.S. Patent No. 10,779,177 - “Device group partitions and settlement platform” (Issued Sep. 15, 2020)

• Technology Synopsis: The patent addresses the need for a platform to manage and settle costs for service usage among multiple parties (e.g., carriers, device manufacturers, service providers) for different groups of devices (’177 Patent, col. 5:5-11). The invention describes a settlement platform that collects device usage information (e.g., micro-CDRs), partitions devices into groups, and applies rules to allocate revenue or costs among partners based on the service activity of those device groups (’177 Patent, Abstract).
• Asserted Claims: At least independent claim 1 (Compl. ¶79).
• Accused Features: The complaint alleges infringement by AT&T's platforms that manage device group partitions and settlement for services on its cellular network, including for eSIM-enabled devices which may involve multiple commercial parties (e.g., the carrier, the device OEM, the end customer) (Compl. ¶¶40, 79).

III. The Accused Instrumentality

Product Identification

The Accused Instrumentalities are identified as AT&T's cellular networks, servers, services, and eSIM-enabled devices (Compl. ¶40).

Functionality and Market Context

• The complaint alleges these instrumentalities form a comprehensive system for managing cellular services. This includes backend servers and network components for eSIM provisioning and management (e.g., SM-DP+, HLR/HSS, PCRF/PCF) and the software and hardware on end-user devices like smartphones, tablets, and IoT devices that operate on AT&T's network (Compl. ¶40). The screenshot of AT&T's wireless coverage map for Marshall, Texas, illustrates the geographic availability of the accused network services (Compl. p. 12).
• The functionality at issue involves the automated provisioning of cellular service profiles to devices (e.g., via eSIM), the creation and management of different service plans, the enforcement of policies for those plans, and the secure allocation of service usage and costs, particularly in enterprise contexts (Compl. ¶¶40, 57, 65, 69, 74, 79).

IV. Analysis of Infringement Allegations

The complaint references claim-chart exhibits (Exhibits 6-10) that are not provided. The following summarizes the narrative infringement theories for the lead patents.

'908 Patent Infringement Allegations

The complaint alleges that AT&T's systems for provisioning and activating eSIM-enabled devices directly infringe claim 56 of the ’908 Patent (Compl. ¶¶56-57). The theory suggests that AT&T's eSIM management platform (including entities like SM-DP+) acts as the claimed "device-group management entity." This entity communicates with eSIM-enabled devices ("first device") operating on its network to provision service. It is alleged that AT&T's system uses a "classification policy" to identify traffic associated with a device's service request and a "control policy" to provision the corresponding service profile, thereby controlling the device's network traffic and performing the claimed method of automated provisioning (Compl. ¶¶40, 57).

• Identified Points of Contention:
  • Scope Questions: A central question may be whether AT&T's eSIM provisioning systems, which likely adhere to GSMA technical standards, meet the specific definitions of "device-group management entity," "classification policy," and "control policy" as defined and used within the patent's specification.
  • Technical Questions: The analysis may turn on whether the communications between an AT&T eSIM-enabled device and its network servers for downloading a profile and activating service constitute the specific steps of "identifying data traffic...based on the classification policy" and "controlling at least a portion of the first traffic...based on the control policy" as required by the claim.

'061 Patent Infringement Allegations

The complaint alleges that AT&T's backend systems for creating and managing cellular service plans infringe claim 1 of the ’061 Patent (Compl. ¶65). The infringement theory posits that AT&T uses internal tools analogous to the claimed "service design system" where its personnel ("user") provide input to define various service plans (e.g., postpaid, prepaid, data-only). These plans are allegedly created from modular policies ("access policy," "accounting policy"). The system then "automatically translat[es]" these high-level plan definitions into low-level "instructions" for network hardware (e.g., HLR/HSS, PCF) that "implement the specified service policies" when a subscriber's device ("the event") uses the network (Compl. ¶¶40, 65).

• Identified Points of Contention:
  • Scope Questions: A likely point of dispute will be whether AT&T's internal network management and service creation tools, which are part of a massive operational support system, function as the specific, modular "service design engine" claimed in the patent, or if they represent a different, more integrated architecture.
  • Technical Questions: A key question will be whether the process of an AT&T engineer creating a new service plan and that plan being deployed to the network constitutes the claimed steps of "accepting user input," "creating a service plan definition," and "automatically translating the service plan definition into instructions."

V. Key Claim Terms for Construction

'908 Patent, Claim 56

• The Term: "device-group management entity"
• Context and Importance: This term defines the network-side actor in the claimed system. Its construction is critical because it will determine whether standard network components like an eSIM Subscription Manager (SM-DP+) or a Home Location Register (HLR) fall within the claim's scope, or if the claim requires a more specific, potentially novel, network entity.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The claim language itself is broad, referring to an "entity" that manages a "device group." This could be argued to cover any network system that manages policies for a plurality of devices.
  • Evidence for a Narrower Interpretation: The specification describes the "service controller 122" as performing these functions, which is depicted as a distinct logical block that interacts with policy servers, integrity servers, and history servers (’908 Patent, Fig. 1). This could support an argument that the term requires a specific combination of functions beyond those of a standard network component.

'061 Patent, Claim 1

• The Term: "automatically translating the service plan definition into instructions"
• Context and Importance: This term is central to the claimed invention, as it describes the core function of converting a high-level service plan into low-level network commands. The dispute will likely focus on the degree of automation and the nature of the "translation" required. Practitioners may focus on this term because the process of deploying a new service plan in a real-world carrier network involves numerous steps, and the level of "automation" alleged by the plaintiff may be contested.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification states the system "translates" the service plan into a "network provisioning instruction set," which could be read broadly to cover any process that converts a logical plan into network-enforceable rules, regardless of the intermediate steps (’061 Patent, col. 9:11-14).
  • Evidence for a Narrower Interpretation: Figure 1 of the patent shows a distinct "Enforcement Element Provisioning Instruction Translation Engine 112," suggesting a specific software module that performs this translation. This could support a narrower construction requiring a dedicated translation engine rather than a series of general-purpose network configuration scripts or processes (’061 Patent, Fig. 1).

VI. Other Allegations

• Indirect Infringement: The complaint alleges that AT&T induces infringement by actively encouraging its customers to use the accused eSIM-enabled devices and services on its network, knowing that such use will practice the patented methods (Compl. ¶¶56, 59, 61, 65, 67).
• Willful Infringement: Willfulness is alleged for all five patents based on pre-suit knowledge. The complaint asserts that AT&T was aware of the patented technology and the pending and issued patents due to a series of meetings, presentations, and disclosures made under an NDA by the inventor's company, ItsOn, between 2009 and 2011 (Compl. ¶¶16-22, 58, 66, 71, 76, 81). The complaint further alleges that AT&T specifically developed its own solutions to replace those offered by ItsOn, suggesting deliberate copying (Compl. ¶27).

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

1. A central issue will be one of prior knowledge and intent: What was the extent of the technical information and patent portfolio details disclosed to AT&T during its discussions with ItsOn from 2009-2011, and does the evidence support the allegation that AT&T used this information to develop the accused systems? The answer will be critical for the willfulness claims.
2. A key technical question will be one of definitional scope: Do AT&T's large-scale, standards-compliant network operations and eSIM provisioning systems meet the specific structural and functional limitations of the patents' claims, such as "device-group management entity" and "service design engine," or do the patents describe a more particular architecture that AT&T does not practice?
3. An evidentiary question will be one of causation and damages: Given that the accused functionalities are fundamental to the operation of a modern cellular network, a significant point of contention will likely be the appropriate methodology for calculating a reasonable royalty that isolates the value of the allegedly patented features from the immense value of the network as a whole.