DCT

2:25-cv-00694

Headwater Research LLC v. T-Mobile USA Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:25-cv-00694, E.D. Tex., 07/07/2025
  • Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because T-Mobile conducts extensive business in the district, has a regular and established place of business, operates cellular base stations, advertises its network coverage, and sells mobile devices within the district.
  • Core Dispute: Plaintiff alleges that Defendant’s cellular networks, servers, services, and associated eSIM-enabled devices infringe six U.S. patents related to managing wireless communication services, including service profile management, adaptive ambient services, and billing architectures.
  • Technical Context: The technology addresses the management of dramatically increasing mobile data consumption by providing methods for carriers to implement granular service policies, create flexible billing models, and offer sponsored or limited-tier services to consumers.
  • Key Procedural History: The complaint alleges that Defendants had pre-suit knowledge of at least some of the asserted patents because ItsOn Inc., a company that licensed Plaintiff's technology, developed software that included a patent marking notice listing the patents-in-suit.

Case Timeline

Date Event
1999-11-22 T-Mobile USA registered to do business in Texas.
2009-01-28 Earliest Priority Date for all Asserted Patents.
2011-01-01 Plaintiff Headwater Research LLC was formed.
2013-01-15 U.S. Patent No. 8,355,337 issued.
2013-09-03 U.S. Patent No. 8,527,630 issued.
2013-11-12 U.S. Patent No. 8,583,781 issued.
2014-01-14 U.S. Patent No. 8,630,617 issued.
2014-07-22 U.S. Patent No. 8,788,661 issued.
2014-12-30 U.S. Patent No. 8,924,549 issued.
2020-04-01 T-Mobile and Sprint closed their merger.
2025-07-07 Complaint for Patent Infringement filed.

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

U.S. Patent No. 8,355,337 - “Network based service profile management with user preference, adaptive policy, network neutrality, and user privacy”

The Invention Explained

  • Problem Addressed: The patent’s background section describes the increasing strain on wireless network capacity from mass-market digital communications, creating a need for more refined service plans and more efficient management of network resources to maintain service provider profitability (’337 Patent, col. 5:2-9, col. 6:53-61).
  • The Patented Solution: The invention proposes a system where service control and policy enforcement are moved from the network's core to a "service processor" on the end-user device itself (’337 Patent, col. 8:54-67). This device processor communicates with a network "service controller" to manage a service profile that includes policy settings for network access, traffic control, and billing, allowing for a more distributed and simplified network architecture (’337 Patent, Abstract; Fig. 16).
  • Technical Importance: This "flattened" architecture aimed to reduce reliance on expensive, centralized core network infrastructure, thereby lowering costs and enabling carriers to offer more flexible and granular service plans to users (’337 Patent, col. 11:45-55).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (’337 Patent, col. 162:16-166:12; Compl. ¶42).
  • Essential elements of claim 1 include:
    • Receiving a first usage measure and a second usage measure of a network service provided via an access network, each measure specifying an amount of use of a network service.
    • Receiving a first classification of data corresponding to the first usage measure and a second classification of data corresponding to the second usage measure.
    • Using the first and second usage measures and classifications to implement a service policy for the device, including service settings for assisting in accounting for usage.
    • The accounting is for a sponsor entity and/or a subscriber.
    • Presenting a notification to the device based on the usage measures and classifications.
  • The complaint does not explicitly reserve the right to assert dependent claims for the ’337 Patent.

U.S. Patent No. 8,527,630 - “Adaptive ambient services”

The Invention Explained

  • Problem Addressed: The patent addresses the challenge for service providers of offering cost-effective or free "ambient" services to attract and retain users without allowing that access to become a financial loss due to excessive bandwidth consumption (’630 Patent, col. 4:10-21).
  • The Patented Solution: The invention describes a method for inspecting a device's network traffic flow to determine if a requested access (e.g., to a website or application) falls within a pre-defined profile for a sponsored service (’630 Patent, Abstract). If it does, the associated data usage is accounted for separately and attributed to a "sponsor entity," such as a content provider or advertiser, who subsidizes the access (’630 Patent, col. 4:22-30). The system can adaptively update the profile based on user behavior, such as allowing "surf-out" access from a sponsored site to a related, non-sponsored site, subject to certain limits (’630 Patent, col. 10:4-10).
  • Technical Importance: This technology provided a framework for new mobile business models, such as sponsored data plans, where third parties could pay for a user's data consumption to promote their own services or content (’630 Patent, col. 4:22-30).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (’630 Patent, col. 35:28-36:34; Compl. ¶54).
  • Essential elements of claim 1 include:
    • Inspecting a traffic flow associated with a device.
    • Identifying a requested access within the traffic flow.
    • Determining, based on rules, whether the requested access is within a profile associated with a first service available over a wireless network.
    • The profile identifies a network destination, an application, or a content type.
    • A first usage associated with the service is accounted for separately from a second usage associated with a second service.
    • If the access is within the profile, creating or modifying a record for assisting in accounting for the first usage to a sponsor entity responsible for subsidizing at least a portion of that usage.
  • The complaint does not explicitly reserve the right to assert dependent claims for the ’630 Patent.

Multi-Patent Capsule: U.S. Patent No. 8,583,781

  • Patent Identification: U.S. Patent No. 8,583,781, “Simplified service network architecture,” issued November 12, 2013.
  • Technology Synopsis: This patent describes a network system that uses a communication interface to enable network system a communication with an end-user device. It collects usage measurements and compares them against a service policy to assist in device-assisted implementation of that service policy (’781 Patent, Abstract). The architecture is designed to simplify network infrastructure by moving policy enforcement capabilities to the device (’781 Patent, col. 11:20-41).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶66).
  • Accused Features: The accused features are T-Mobile's cellular networks, servers, and services that manage and provide data access to mobile devices (Compl. ¶26).

Multi-Patent Capsule: U.S. Patent No. 8,630,617

  • Patent Identification: U.S. Patent No. 8,630,617, “Device group partitions and settlement platform,” issued January 14, 2014.
  • Technology Synopsis: This patent discloses a method for a network system to obtain usage information associated with an end-user device and generate first and second sets of information from it. The system uses these different sets of information to provide separate accounting to different entities (e.g., a device user and a third-party partner), enabling settlement platforms for complex service plans or device groups (’617 Patent, Abstract).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶77).
  • Accused Features: The accused features are T-Mobile's cellular networks, servers, and services that manage and provide data access to mobile devices (Compl. ¶26).

Multi-Patent Capsule: U.S. Patent No. 8,788,661

  • Patent Identification: U.S. Patent No. 8,788,661, “Device assisted CDR creation, aggregation, mediation and billing,” issued July 22, 2014.
  • Technology Synopsis: This patent describes a method for monitoring network traffic and obtaining a first accounting of usage for a portion of the traffic sponsored by a third party, and a second accounting for non-sponsored traffic for which the subscriber is financially responsible. The system provides an accounting record to the sponsor based on the first accounting, facilitating device-assisted creation of billing records (CDRs) (’661 Patent, Abstract).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶87).
  • Accused Features: The accused features are T-Mobile's cellular networks, servers, and services that manage and provide data access to mobile devices (Compl. ¶26).

Multi-Patent Capsule: U.S. Patent No. 8,924,549

  • Patent Identification: U.S. Patent No. 8,924,549, “Network based ambient services,” issued December 30, 2014.
  • Technology Synopsis: This patent discloses a system where a network operator monitors traffic to a device and identifies traffic associated with a first application, for which a sponsor subsidizes usage. The system also identifies other traffic outside the sponsored application and allocates a usage offset to an account for the first application, creating a sponsored "ambient service" while billing other usage to the user or another entity (’549 Patent, Abstract).
  • Asserted Claims: Independent claim 1 is asserted (Compl. ¶97).
  • Accused Features: The accused features are T-Mobile's cellular networks, servers, and services that manage and provide data access to mobile devices (Compl. ¶26).

III. The Accused Instrumentality

Product Identification

The Accused Instrumentalities are T-Mobile's cellular networks, servers, and services, including its eSIM provisioning and management systems/components (e.g., SM-DP+, SM-DP, RSP, SM-SR, SM-DS, AAA/UDM/AUSF, HLR/HSS, and PCRF/PCF entities) (Compl. ¶26). Also accused are eSIM-enabled devices such as mobile phones, tablets, and IoT devices that operate on T-Mobile's network (Compl. ¶26).

Functionality and Market Context

The accused instrumentalities collectively provide 4G and 5G cellular data services to subscribers across the United States (Compl. ¶34). These systems manage device access, enforce data plan limits, track usage, and facilitate billing for a subscriber base that the complaint alleges was approximately 110 million as of late 2021 (Compl. ¶33). The complaint presents a coverage map showing T-Mobile's advertised 5G and 4G LTE network availability within the Eastern District of Texas (Compl. p. 10, ¶32). A chart of mobile data traffic from 2011-2027 is used to illustrate the market context of rapidly growing data demand that these networks must manage (Compl. p. 5, ¶13).

IV. Analysis of Infringement Allegations

8,355,337 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
a method, comprising: receiving a first usage measure and a second usage measure of a network service provided via the access network...each measure specifying an amount of use of a network service provided via the access network by a communications device... T-Mobile's network servers (e.g., AAA/UDM/AUSF, HLR/HSS, PCRF/PCF) allegedly receive usage data from devices on the network, which quantifies the amount of data consumed under different service categories. ¶26 col. 13:45-54
receiving a first classification of data corresponding to the first usage measure and a second classification of data corresponding to the second usage measure... T-Mobile's systems allegedly classify the received usage data according to different service types or billing plans associated with the subscriber's account. ¶26 col. 7:1-6
using the first and second usage measures and the first and second classifications of data to facilitate implementation of a service policy for the communications device, the service policy including one or more network service settings...for assisting in...accounting T-Mobile's network allegedly uses the classified usage data to enforce the rules of a subscriber's service plan (e.g., data caps, throttling), which constitutes implementing a service policy. This process assists in accounting for data usage against the subscriber's plan. ¶26 col. 9:8-14
the accounting being for at least a portion of the first usage measure, to one or more of (1) a sponsor entity..., (2) a subscriber associated with the communications device... The accounting for data usage is allegedly applied to the subscriber's account associated with the device. ¶26 col. 162:57-62
and presenting a notification to the communications device, wherein the notification is based on the one or more usage measures and the one or more classifications of data. T-Mobile's network allegedly sends notifications to user devices regarding their data usage, such as alerts when they are approaching their data limit. The complaint provides an "Ericsson Mobility Calculator" graphic illustrating different categories of data consumption that could be subject to such notifications (Compl. p. 6). ¶26 col. 64:15-23
  • Identified Points of Contention:
    • Scope Questions: A central question may be whether T-Mobile's network-centric accounting system meets the claim limitation of "receiving a first usage measure... from a communications device." The defense may argue that the patent requires a specific device-assisted reporting architecture, while the plaintiff may contend that any system that ultimately obtains usage data attributable to a device meets this limitation.
    • Technical Questions: What specific evidence does the complaint provide that T-Mobile's system uses distinct "first" and "second" usage measures and classifications as claimed, rather than a single, continuous measure of data consumption? The analysis may focus on whether different data types (e.g., streaming video vs. messaging, as depicted in Compl. p. 6) are treated as formally separate classifications that trigger different service policy rules.

8,527,630 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A method comprising: inspecting a traffic flow associated with a device; identifying a requested access within the traffic flow... T-Mobile's network components (e.g., PCRF/PCF entities) allegedly inspect data traffic from a user's device to identify requests for access to specific network destinations or applications. ¶26 col. 13:45-51
determining, based on one or more rules, whether the requested access is within a profile associated with a first service available to the device over a wireless network, the profile identifying a network destination, an application on the device, or a content type... T-Mobile's network allegedly determines if the requested access corresponds to a specific service or data plan feature (e.g., a "zero-rated" application or service) based on the rules of the subscriber's plan. ¶26 col. 14:1-9
a first usage associated with the service being accounted for separately from a second usage associated with a second service available to the device... Data usage for certain services (e.g., sponsored or zero-rated services) is allegedly accounted for separately from the user's general data allowance. ¶26 col. 14:15-21
and if the requested access is within the profile, creating or modifying a record for assisting in accounting for a measure of the first usage to a sponsor entity responsible for at least subsidizing at least a portion of the first usage... When a user accesses a sponsored service, T-Mobile's systems allegedly create a billing record that attributes the cost of that data usage to a partner entity (the alleged "sponsor entity") rather than deducting it from the user's primary data plan. ¶26 col. 14:22-30
  • Identified Points of Contention:
    • Scope Questions: The case may turn on the definition of "sponsor entity." The defense could argue this requires a specific third-party payment model not present in standard T-Mobile plans, while the plaintiff may argue that internal accounting practices or partnerships for "zero-rated" services satisfy the definition.
    • Technical Questions: Does T-Mobile's network perform the claimed step of "inspecting a traffic flow" to "identify a requested access" in a manner that maps to the patent's description of an "adaptive ambient service"? The analysis will likely scrutinize whether T-Mobile's standard policy and charging functions (PCRF/PCF) perform the specific, rule-based categorization and separate accounting required by the claim.

V. Key Claim Terms for Construction

  • Term from '337 Patent: "service policy"

    • Context and Importance: The scope of this term is critical because infringement requires the accused system to "facilitate implementation of a service policy." A narrow construction focusing on specific device-side rules could create challenges for the plaintiff's network-centric theory, while a broad construction covering any set of rules for network service could favor the plaintiff.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification describes a service policy as encompassing a wide range of settings, including "traffic control settings, billing system settings, user notification settings, user privacy settings, user preference settings," which could be interpreted to cover general network-level service plan rules ( '337 Patent, col. 8:5-15).
      • Evidence for a Narrower Interpretation: The patent repeatedly discusses the service policy in the context of a "service processor" located on the end-user "device" that implements policy control, suggesting the policy is a set of rules specifically configured for device-assisted enforcement (’337 Patent, Abstract; col. 8:62-67).

  • Term from '630 Patent: "sponsor entity"

    • Context and Importance: This term is foundational to the claimed invention, which centers on a business model where a third party subsidizes a user's data access. Proving infringement requires identifying a "sponsor entity" in T-Mobile's operations. Practitioners may focus on this term because its definition will determine whether T-Mobile's "zero-rating" partnerships or other business arrangements fall within the claim scope.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The patent abstract defines the sponsor entity simply as being "responsible for at least subsidizing at least a portion of the first usage," a functional definition that could arguably apply to any partner in a zero-rating or bundled service arrangement (’630 Patent, Abstract).
      • Evidence for a Narrower Interpretation: The detailed description provides specific examples of sponsor entities, such as "transaction partners," "advertising sponsored website partners," and other entities interested in "paying for one or more ambient services," which could be used to argue the term is limited to specific commercial arrangements where a third party explicitly pays the carrier for user data access (’630 Patent, col. 4:9, col. 4:26-30).

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that Defendants induce infringement by actively encouraging and instructing customers to use their networks and devices in a manner that infringes the asserted patents (Compl. ¶¶ 44, 46, 56, 58). This is based on Defendants providing the accused instrumentalities and instructions on their use to customers (Compl. ¶46).
  • Willful Infringement: Willfulness is alleged based on Defendants' purported knowledge of the patents. The complaint claims this knowledge arises from at least two sources: (1) a patent marking notice included in ItsOn software, which was licensed and used in the industry and listed the asserted patents, and (2) the filing and service of the complaint itself (Compl. ¶¶ 43, 45, 55, 57).

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

  • A core issue will be one of definitional scope: can terms rooted in the patents’ specific architectures, such as "adaptive ambient service" and "sponsor entity," be construed broadly enough to read on T-Mobile’s modern network services, including its "zero-rated" application offerings and partner programs? The outcome may depend on whether the court views these terms as describing a high-level business model or a specific technical implementation.
  • A key evidentiary question will be one of locus of control and measurement: do T-Mobile’s network-centric systems for monitoring usage and enforcing policies perform the specific steps of the asserted claims, many of which are described in the patents as being implemented at least in part on the end-user device via a "service processor"? The case will likely require a detailed technical comparison between the patented device-assisted architecture and the actual operation of T-Mobile's accused network infrastructure.