Headwater Research LLC v. Cellco Partnership

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Headwater Research LLC (Texas)
  • Defendant: 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-00692, E.D. Tex., 07/07/2025
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Verizon has a regular and established place of business in the District, conducts extensive business there, and has purposefully placed the accused products and services into the stream of commerce with the expectation that they will be used by consumers in the District.
• Core Dispute: Plaintiff alleges that Defendant’s cellular networks, servers, services, and eSIM-enabled devices infringe four patents related to the management of mobile device service plans, user notifications, and billing allocation.
• Technical Context: The technology addresses the challenges of managing and billing for mobile data consumption in an environment of rapidly increasing demand, providing granular control for both consumers and enterprise users.
• Key Procedural History: The complaint alleges a detailed pre-suit history between the parties (and their predecessors) from 2009-2013, including an NDA, technical presentations on the patented technology, a paid software evaluation agreement, and the development of a Verizon-specific prototype. The complaint also references a 2013 whistleblower lawsuit filed by a former Verizon director which allegedly detailed the "misappropriation of intellectual property" from Plaintiff's predecessor.

Case Timeline

Date	Event
2009-01-28	Earliest Priority Date for ’983 Patent
2009-02-04	Earliest Priority Date for ’627 Patent
2009-06-30	Headwater and Verizon enter into NDA
2009-08-31	Headwater presents ItsOn platform to Verizon
2009-10-01	Headwater presents Detailed Patent Brief to Verizon (approx.)
2010-01-01	Verizon and ItsOn enter Software License Agreement (approx.)
2011-05-01	Verizon-specific prototype platform developed (approx.)
2011-06-01	Headwater provides Updated Patent Brief to Verizon (approx.)
2013-10-01	Whistleblower complaint filed against Verizon (approx.)
2014-01-21	U.S. Patent No. 8,635,678 Issues
2014-06-03	U.S. Patent No. 8,745,220 Issues
2019-10-29	U.S. Patent No. 10,462,627 Issues
2020-01-14	U.S. Patent No. 10,536,983 Issues
2025-07-07	Complaint Filed

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

U.S. Patent No. 10,462,627 - “Service plan design, user interfaces, application programming interfaces, and device management”

• Patent Identification: U.S. Patent No. 10,462,627, titled “Service plan design, user interfaces, application programming interfaces, and device management,” issued October 29, 2019. (Compl. ¶39).

The Invention Explained

• Problem Addressed: The patent’s background section describes the increasing difficulty for both consumers and wireless carriers in managing service plans amid an explosion of mobile applications and data usage. It notes the limitations of traditional, inflexible service plans and the need for greater customization and control (U.S. Patent No. 10,462,627, col. 1:15-62).
• The Patented Solution: The invention provides a system where a central “service design center” and “service controller” interact with mobile devices to allow for the creation and management of device groups (e.g., family plans) and customized service plans (’627 Patent, Abstract; Fig. 1). This architecture enables a primary or “master” device to establish and enforce policies, such as application permissions, on secondary or “non-master” devices within its group (’627 Patent, col. 22:31-39).
• Technical Importance: This technology provided a framework for flexible, multi-device service management, enabling features like parental controls and shared data plans that were becoming critical as households and businesses began managing fleets of connected devices (’627 Patent, col. 2:48-58).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶82).
• The essential elements of claim 1 are:
  • Maintaining a primary mobile device and a secondary mobile device in a network-based service management system.
  • Supplying first credentials from the primary mobile device to a service controller over a first secure link, establishing the primary device as a "master device."
  • Supplying second credentials between the service controller and the secondary mobile device over a second secure link, establishing it as a "non-master device."
  • Communicating instructions for application permission controls from the primary device to the service controller.
  • Applying those application permission controls from the service controller to the secondary mobile device.
• The complaint does not explicitly reserve the right to assert dependent claims for the ’627 Patent.

U.S. Patent No. 10,536,983 - “Enterprise access control and accounting allocation for access networks”

• Patent Identification: U.S. Patent No. 10,536,983, titled “Enterprise access control and accounting allocation for access networks,” issued January 14, 2020. (Compl. ¶40).

The Invention Explained

• Problem Addressed: The patent identifies the challenge for enterprises in allocating billing for employees who use a single wireless device for both personal and business purposes. This creates accounting complexity and potential for misuse of corporate-sponsored services (’983 Patent, col. 4:1-23).
• The Patented Solution: The invention discloses a method for allocating service usage billing between enterprise and consumer accounts. The system monitors a service usage activity on a device associated with an enterprise, determines an allocation between enterprise and consumer use, bills the consumer account for the personal portion, and credits that same account for the enterprise-sponsored portion (’983 Patent, Abstract; Fig. 27).
• Technical Importance: This approach provides a technical foundation for "Bring Your Own Device" (BYOD) programs by enabling automated and granular splitting of service costs, which can reduce administrative overhead for companies and offer flexibility for employees (’983 Patent, col. 4:15-32).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶94).
• The essential elements of claim 1 are:
  • Monitoring a service usage activity of a wireless communication device associated with an enterprise account.
  • Determining an enterprise and consumer billing allocation for the monitored activity.
  • Billing a consumer account for the consumer portion of the usage based on the allocation.
  • Crediting the consumer account for the enterprise portion of the usage based on the allocation.
• The complaint does not explicitly reserve the right to assert dependent claims for the ’983 Patent.

Multi-Patent Capsule: U.S. Patent No. 8,635,678

• Patent Identification: U.S. Patent No. 8,635,678, titled “Automated device provisioning and activation,” issued January 21, 2014 (Compl. ¶37).
• Technology Synopsis: The patent title suggests the technology relates to methods for automatically configuring and activating wireless devices on a network. This likely involves the device communicating with network servers to receive credentials, service policies, and other information required to establish a connection and enable services.
• Asserted Claims: Claim 1 (Compl. ¶58).
• Accused Features: The complaint accuses Verizon's systems for provisioning and activating devices, including its eSIM management systems and components such as SM-DP+ and RSP entities (Compl. ¶43, ¶58).

Multi-Patent Capsule: U.S. Patent No. 8,745,220

• Patent Identification: U.S. Patent No. 8,745,220, titled “System and method for providing user notifications,” issued June 3, 2014 (Compl. ¶38).
• Technology Synopsis: Based on the title, the patent appears to cover systems and methods where a network provides notifications to a user's device. These notifications could relate to service usage levels, account status, policy enforcement, or offers for new services.
• Asserted Claims: Claim 1 (Compl. ¶70).
• Accused Features: The complaint targets Verizon's services that send notifications to users regarding their cellular plans, data usage, and account status (Compl. ¶43, ¶70).

III. The Accused Instrumentality

Product Identification

• The Accused Instrumentalities are identified as Verizon's cellular networks, servers, and services, including specific backend components for eSIM provisioning (SM-DP+, SM-DP), authentication (AAA/UDM/AUSF), and policy control (PCRF/PCF) (Compl. ¶43). The allegations also cover eSIM-enabled devices operating on Verizon's network, such as phones, tablets, and IoT devices (Compl. ¶43).

Functionality and Market Context

• The complaint alleges that these components collectively operate to provision, manage, and provide cellular service to end-user devices (Compl. ¶43). This functionality includes activating new devices, enforcing service plan policies, managing multi-device accounts (e.g., family plans), providing enterprise billing solutions, and sending user notifications about data consumption (Compl. ¶¶58, 70, 82, 94). The complaint includes a chart projecting massive growth in mobile data traffic to illustrate the commercial importance of these data management services (Compl. p. 5). The complaint also provides a coverage map showing Verizon's network availability in Marshall, Texas, to demonstrate the operation of the accused services within the judicial district (Compl. ¶49).
• The complaint alleges Verizon's significant market position, citing approximately 115 million wireless retail connections as of mid-2022, to establish the scale of the accused operations (Compl. ¶50).

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits that were not provided. The infringement theories are summarized below in prose.

U.S. Patent No. 10,462,627 Infringement Allegations

The complaint alleges that Verizon's systems for managing multi-device accounts, such as family plans, practice the method of claim 1 (Compl. ¶82). The theory suggests that when a primary account holder adds a secondary line, the primary user's device acts as the "master device," which securely communicates with Verizon's "service controller" to establish its status and to send "application permission controls," such as parental controls or data limits. The controller then allegedly communicates with the secondary device to establish it as a "non-master device" and applies the permission controls received from the master device.

Identified Points of Contention

• Scope Questions: A central question may be whether a user managing an account through a web portal or application on a "primary mobile device" meets the claim limitation of "supplying first credentials... from the primary mobile device." The analysis may turn on whether the credentials and instructions originate from the device's unique identity or merely from a user inputting account-level information through an application running on that device.
• Technical Questions: What evidence does the complaint provide that Verizon's architecture uses distinct first and second "secure communication links" for the primary and secondary devices in the manner described by the claim? Further, what is the specific mechanism by which "application permission controls" are communicated from the primary device to the controller and then applied to the secondary device?

U.S. Patent No. 10,536,983 Infringement Allegations

The complaint alleges that Verizon's services for enterprise customers, which allow for splitting service charges between corporate and personal use, infringe claim 1 (Compl. ¶94). The infringement theory posits that Verizon's network "monitors" the service activity on an employee's device, "determines" whether the usage is for enterprise or personal purposes, and then performs a "billing" and "crediting" operation on the consumer's account to reflect this allocation.

Identified Points of Contention

• Scope Questions: The dispute may focus on the term "determining an enterprise and consumer billing allocation." The question will be whether Verizon's method, whatever it may be, performs this "determining" on a per-"activity" basis as the claim requires, or whether it uses a less granular method that falls outside the claim's scope.
• Technical Questions: What technical process does Verizon actually use to differentiate between enterprise and consumer "service usage activity" on a single device? Does it involve device-side agents, deep packet inspection in the network, or a different accounting mechanism, and how does that process align with the methods described in the patent?

V. Key Claim Terms for Construction

For the ’627 Patent

The Term

• "supplying first credentials... from the primary mobile device"

Context and Importance

• The construction of this term is critical because it defines the origin and nature of the "master device" designation. Whether this requires credentials intrinsic to the device hardware (e.g., IMEI, SIM data) or can be satisfied by a user logging into an account via an app on the device will directly impact the infringement analysis.

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The specification discusses user interaction with the system through a "navigable website, application or service portal," which may support an interpretation where user actions on the device constitute "supplying... credentials" (’627 Patent, col. 22:25-30).
• Evidence for a Narrower Interpretation: The specification provides an extensive list of potential "credentials," including hardware-specific identifiers like MSID, IMSI, IMEI, a SIM number, or a MAC address, which could support an interpretation requiring the credentials to be tied to the device's unique identity rather than just a user account (’627 Patent, col. 51:33-56).

For the ’983 Patent

The Term

• "monitoring a service usage activity"

Context and Importance

• This term is central to the claimed invention. Its definition will determine the required granularity of Verizon's monitoring. Practitioners may focus on this term because the infringement case depends on whether Verizon's system monitors discrete "activities" (e.g., use of a specific application, connection to a specific server) or simply measures bulk data consumption.

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The claim language itself is general. The abstract broadly claims "monitoring a service usage activity," which could be argued to cover any observation of service use (’983 Patent, Abstract).
• Evidence for a Narrower Interpretation: The Detailed Description provides examples that suggest a more granular approach, such as distinguishing between a "consumer voice app" and an "enterprise voice app" or monitoring traffic to an "enterprise network," which suggests the "activity" is tied to a specific application or destination (’983 Patent, Fig. 1; col. 4:15-32).

VI. Other Allegations

Indirect Infringement

• The complaint alleges inducement across all asserted patents, based on Verizon actively encouraging and providing instructions to its customers on how to use the accused features, such as setting up multi-device plans or enterprise accounts (Compl. ¶¶57, 69, 81, 93).

Willful Infringement

• The complaint alleges that Verizon's infringement was and continues to be willful. This allegation is based on alleged pre-suit knowledge of the pending patents and underlying technology gained through a multi-year business relationship with Plaintiff's predecessor from 2009-2013, which included technical presentations, a paid pilot program, and an NDA (Compl. ¶¶16-29, 59, 71). The claim is further supported by allegations from a 2013 whistleblower complaint and by the alleged presence of patent marking notices in software licensed to Verizon (Compl. ¶¶31, 59).

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

• A core issue will be one of historical knowledge and intent: To what extent will the extensive pre-suit collaboration and alleged technology disclosures between the parties from 2009-2013, coupled with the allegations in the subsequent whistleblower complaint, support a finding of pre-suit knowledge and willful infringement?
• A key technical question will be one of architectural equivalence: Do Verizon's commercial systems for managing family plans and corporate accounts technically operate according to the specific "master/non-master device" credentialing and "activity-level" billing allocation steps recited in the asserted claims, or is there a fundamental mismatch in how the accused systems are designed and implemented?