Headwater Research LLC v. Verizon Communications Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Headwater Research LLC (Texas)
  • Defendant: Verizon Communications Inc., Cellco Partnership, d/b/a Verizon Wireless, and Verizon Corporate Services Group Inc. (Delaware, New York)
  • Plaintiff’s Counsel: Russ August & Kabat
• Case Identification: 2:25-cv-00687, E.D. Tex., 07/03/2025
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Verizon conducts extensive business in the district, advertises and sells the accused products and services there, and maintains a regular and established place of business within the district.
• Core Dispute: Plaintiff alleges that Defendant’s cellular networks, servers, services, and associated eSIM-enabled devices infringe five patents related to managing, securing, and billing for mobile data services.
• Technical Context: The technology addresses the management of mobile data on end-user devices, a critical function for network operators facing explosive growth in data consumption driven by smartphones and other connected devices.
• Key Procedural History: The complaint details an extensive pre-suit history between the parties, including a 2009 Non-Disclosure Agreement (NDA), multiple technical presentations by Plaintiff to Defendant, a 2010 software evaluation and license agreement, and joint development of a prototype platform. The complaint also references a 2013 whistleblower lawsuit filed by a former Verizon director, which allegedly detailed the "misappropriation of intellectual property (shared by ItsOn under an NDA)" by Verizon. These allegations of a prior relationship and knowledge will be central to claims 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 addresses the need for a system and method for managing mobile device services, including the activation of devices and the application of service policies that control how a device can access a wireless network ('908 Patent, col. 1:7-24).
• The Patented Solution: The invention describes a method where a device's service usage is managed by a device-side "service processor" that communicates with a network-side "service controller." This system identifies traffic associated with available service activities and applies a control policy to that traffic, allowing for flexible and automated provisioning of services without requiring manual configuration for each new service or policy update ('908 Patent, Abstract; col. 6:3-20).
• Technical Importance: This approach allows for more granular and dynamic control over network access than traditional network-based systems, enabling new business models like sponsored data or application-specific service plans ('908 Patent, col. 6:21-34).

Key Claims at a Glance

• The complaint asserts independent claim 1 ('908 Patent, col. 163:40-164:66; Compl. ¶60).
• Essential elements of claim 1, a method performed by a network system, include:
  • Defining a device-group management entity and a device-group policy applicable to a device group.
  • The device group includes a first and second end-user device communicatively coupled to the network system over a wireless network.
  • The policy comprises a first classification policy to assist in identifying traffic associated with one or more available service activities and a first control policy to assist in controlling at least a portion of the traffic.
  • The method involves identifying, attempting, or successfully completing data traffic over the first wireless network associated with the first end-user device.
  • Based on the classification policy, identifying first traffic associated with one or more available service activities.
  • Based on the control policy, controlling at least a portion of the first traffic.
• The complaint does not explicitly reserve the right to assert dependent claims for the ’908 Patent.

U.S. Patent No. 9,706,061 - "Service design center for device assisted services" (Issued Jul. 11, 2017)

The Invention Explained

• Problem Addressed: The patent identifies the cumbersome and rigid process network carriers use to design and implement new service plans, which hinders the ability to create customized or flexible offerings for different user groups ('061 Patent, col. 1:24-41).
• The Patented Solution: The invention provides a "service design center," a network-based system that allows an administrator to define and provision service plans using modular components. It translates high-level plan definitions (e.g., data limits, application access rules) into specific instructions for network enforcement elements, streamlining the creation and deployment of customized service policies ('061 Patent, Abstract; col. 2:10-18). The complaint includes a screenshot of an interface that allows an administrator to define a plan's properties, such as its name, price, and whether it is a sponsored or paid plan (Compl. p. 31, FIG. 3I).
• Technical Importance: This technology enables carriers, enterprises, or other entities to rapidly create and deploy a wide variety of tailored service plans without requiring deep technical changes to the core network for each new plan ('061 Patent, col. 2:45-51).

Key Claims at a Glance

• The complaint asserts independent claim 1 ('061 Patent, col. 43:42-44:31; Compl. ¶72).
• Essential elements of claim 1, a method for operating a service design system, include:
  • Accepting user input via a user interface that defines an event associated with the use of a wireless access network.
  • Accepting user input specifying a plurality of service policies associated with the event, including at least an access policy and a service accounting policy.
  • Creating a service plan definition based on the event and the specified service policies.
  • Automatically translating the service plan definition into instructions for policy implementation elements to cause them to implement the policies when the event is detected for an applicable wireless end-user device.
• The complaint does not explicitly reserve the right to assert dependent claims for the ’061 Patent.

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

• Technology Synopsis: This patent describes a security architecture for a wireless device that uses multiple, separate execution environments or "partitions" ('144 Patent, Abstract). A "protected execution partition" is isolated from the main application and kernel partitions to securely execute agents that measure and control network traffic, thereby resisting hacking or malware ('144 Patent, Abstract; col. 6:5-14).
• Asserted Claims: Independent claim 1 is asserted (Compl. ¶84).
• Accused Features: The complaint alleges that Verizon's cellular networks, servers, services, and eSIM-enabled devices implement the claimed secure, partitioned architecture for managing device services (Compl. ¶¶45, 84).

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

• Technology Synopsis: This patent applies device-assisted service management to an enterprise context. It describes a system for allocating mobile service usage costs between an enterprise and an individual consumer (e.g., an employee), allowing for separate billing policies for personal and business use on the same device ('250 Patent, Abstract).
• Asserted Claims: Independent claim 1 is asserted (Compl. ¶96).
• Accused Features: The complaint alleges that Verizon's networks, servers, and services provide functionality for allocating service usage between different accounts, such as for enterprise customers, which infringes the patent (Compl. ¶¶45, 96).

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

• Technology Synopsis: The patent discloses a "settlement platform" that processes device-generated usage information (e.g., "micro-CDRs") for groups of devices ('177 Patent, Abstract). This platform allows for complex billing and revenue-sharing arrangements between multiple parties, such as a device manufacturer, a service provider, and a content partner, based on the service activity of a group of devices ('177 Patent, col. 1:50-62).
• Asserted Claims: Independent claim 1 is asserted (Compl. ¶108).
• Accused Features: The complaint accuses Verizon's networks, servers, and services that manage and bill for groups of devices, such as those with eSIM capabilities, of infringing the patent (Compl. ¶¶45, 108).

III. The Accused Instrumentality

Product Identification

• The accused instrumentalities are broadly defined as Verizon's cellular networks, servers, and services, along with eSIM-enabled devices operating on those networks (Compl. ¶45). Specific network components identified include eSIM provisioning and management systems (SM-DP+, SM-DP, RSP, SM-SR, SM-DS), authentication and policy control entities (AAA/UDM/AUSF, HLR/HSS, PCRF/PCF), and various end-user devices like mobile phones, tablets, and IoT devices (Compl. ¶45).

Functionality and Market Context

• The complaint alleges these instrumentalities work together as a system to provision, manage, secure, and bill for cellular data services on millions of devices across the United States (Compl. ¶¶45, 52). A central accused functionality is the management of eSIMs, which allows for remote and dynamic provisioning of cellular service plans onto devices without a physical SIM card (Compl. ¶45). The complaint supports its venue allegations by including a screenshot of Verizon's online coverage map, which shows the availability of its 4G LTE and 5G networks in the Eastern District of Texas (Compl. p. 14). A second screenshot of Verizon's store locator is provided to demonstrate its physical business presence in the district (Compl. p. 15).

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits that are not provided. The following summarizes the infringement allegations in prose.

'908 Patent Infringement Allegations

The complaint alleges that Verizon's system for managing groups of devices (e.g., family plans or enterprise accounts) infringes claim 1 of the ’908 Patent (Compl. ¶¶59-60). The narrative suggests that Verizon’s network system defines device groups and applies group-wide policies to control data traffic for devices within that group, such as eSIM-enabled phones or tablets (Compl. ¶45). This alleged application of a common policy to control traffic for a group of devices is the purported basis for infringement (Compl. ¶60).

• Identified Points of Contention:
  • Scope Questions: A potential issue may be whether Verizon's system performs the claimed method steps of "identifying" and "classifying" traffic in the specific manner required by the claim language, or if it uses a different technical approach to policy enforcement.
  • Technical Questions: What evidence does the complaint provide that Verizon's network performs both the "classification policy" and "control policy" as distinct but cooperative steps recited in the claim? The court may need to determine if these are functionally separate operations in the accused system.

'061 Patent Infringement Allegations

The complaint alleges that Verizon's systems and methods for creating and managing cellular service plans infringe claim 1 of the ’061 Patent (Compl. ¶¶71-72). The theory appears to be that Verizon operates a "service design center"—a system that allows administrators to define service plans (e.g., setting access rules and accounting policies) and then automatically translates those definitions into enforceable rules within its network (Compl. ¶¶38, 72). The complaint provides a screenshot of a user interface for creating service plans that it asserts is representative of the claimed invention (Compl. p. 31, FIG. 3I).

• Identified Points of Contention:
  • Scope Questions: A central question may be whether Verizon’s internal tools for creating service plans meet the claim limitation of "automatically translating the service plan definition into instructions." The dispute may turn on the degree of automation and the technical nature of the translation process in Verizon's system versus what is described in the patent.
  • Technical Questions: Does the accused system accept user input to define both an "event" and associated "service policies" as distinct inputs that are then combined to create a plan, as the claim structure suggests?

V. Key Claim Terms for Construction

'144 Patent

• The Term: "protected execution partition"
• Context and Importance: This term appears in independent claim 1 of the ’144 Patent and is central to the patent’s security model. The patent describes a device architecture with at least three separate environments: an application partition, a kernel partition, and the claimed "protected execution partition" ('144 Patent, col. 5:25-34). The infringement case for this patent may depend on whether Verizon's accused devices and systems implement this specific tripartite, secured architecture.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification suggests the partition is a "virtual execution environment" supported by configurations in the host, which could be read to include software-based security containers and not just hardware-enforced separation ('144 Patent, col. 6:15-18).
  • Evidence for a Narrower Interpretation: The patent repeatedly emphasizes that this partition has "increased program execution protection" and is established for the "secure operation of device assisted services," distinct from the general-purpose application and kernel partitions ('144 Patent, col. 6:20-24; Fig. 1). The abstract also suggests it is "separately secured to resist hacking," which could imply a higher security standard than typical sandboxing.

VI. Other Allegations

• Indirect Infringement: For all asserted patents, the complaint alleges that Verizon induces infringement by actively encouraging and instructing customers to use the accused networks, services, and devices in an infringing manner (e.g., Compl. ¶¶61, 64). The basis for knowledge is the alleged extensive pre-suit relationship between the parties from 2009-2013, which included technical presentations, prototype development, and disclosure of the patent applications that would later issue as the Asserted Patents (Compl. ¶¶16-29, 61).
• Willful Infringement: The complaint alleges willful infringement based on Verizon's alleged knowledge of the patents and pending applications dating back to at least October 2009 (Compl. ¶20, 61). This knowledge is allegedly supported by an NDA, joint development efforts, and a whistleblower complaint that explicitly accused Verizon of misappropriating the technology (Compl. ¶31). The complaint alleges that despite this long-standing knowledge, Verizon continued its infringing activities (Compl. ¶62-63).

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

• A core issue will be one of historical conduct and knowledge: The extensive pre-suit history detailed in the complaint, including an NDA, technical disclosures, and allegations of misappropriation from a whistleblower, will be central. The key question for the willfulness claim will be what Verizon knew about Headwater's technology and when, and whether its subsequent actions constitute objective recklessness.
• A key technical question will be one of architectural equivalence: Does Verizon's system for managing and securing mobile services, particularly on eSIM-enabled devices, implement the specific "protected execution partition" architecture claimed in the '144 patent, or does it achieve similar security objectives through a fundamentally different and non-infringing technical design?
• A third question will be one of system-level functionality: The claims are directed at complex system-level methods for creating, provisioning, and enforcing group-based service policies. The court will need to determine whether the integrated operation of Verizon's various accused components—from its "service design center" to its network policy servers and end-user devices—collectively performs the specific, multi-step methods recited in the claims of the '908 and '061 patents.