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Server Technology, Inc. v. Schneider Electric IT Corp.

United States District Court, D. Nevada

March 30, 2018

SERVER TECHNOLOGY, INC., Plaintiff,
v.
SCHNEIDER ELECTRIC IT CORPORATION, f.k.a. AMERICAN POWER CONVERSION CORPORATION, Defendant.

          ORDER

          LARRY R. HICKS, UNITED STATES DISTRICT JUDGE.

         Before the court is defendant Schneider Electric IT Corporation's (“Schneider”), formerly known as American Power Conversion Corporation (“APC”), renewed motion for summary judgment on the issue of patent obviousness under 35 U.S.C. § 103. ECF No. 718. Plaintiff Server Technology, Inc. (“STI”) filed an opposition to the motion (ECF No. 723) to which Schneider replied (ECF No. 729).

         I. Facts and Procedural Background

         Plaintiff STI manufactures intelligent electrical power distribution devices. Like STI, defendant Schneider also manufactures intelligent electrical power distribution devices.

         In 2006, STI initiated the underlying patent infringement action against Schneider, then known as APC, alleging that certain APC product designs (the AP7900 and AP8900 product lines) infringed several of STI's patents, including United States Patents nos. 7, 043, 543 (“the ‘543 patent”)[1] and 7, 702, 771[2] (“the ‘771 patent”). ECF No. 1. STI's patents-in-suit relate to intelligent power distribution units (“PDUs”). PDUs resemble in look and function the electrical plugstrips/power strips ubiquitous in homes and offices that are used to distribute power from a single electrical outlet located in a wall or floor to a multitude of connected electrical appliances (like computers, telephones, printers, televisions, and video game systems). Intelligent PDUs, however, contain “intelligent” design features not present in normal consumer plugstrips. For example, the PDUs at issue in this action contain “switched” outlets, meaning that each outlet or group of outlets on the PDU can be turned on or off remotely over a network. Further, these PDUs continuously monitor electrical information (including voltage, current, and power used by the PDU) and convey this information to the end-user either remotely over a computer network or locally via a display built into the PDU.

         The intelligent PDUs designed and manufactured by STI and Schneider/APC are primarily used in large scale applications such as commercial data centers; warehouse-like facilities that maintain and operate networked computer servers.[3] Each data center is filled with rows of equipment racks on which networked computer servers are housed. Because the equipment racks are a standard size, data centers profit by maximizing the number of servers that can be powered in each rack: the more servers that can be powered per rack, the more powerful and profitable the data center. Thus, data centers require a constant and reliable power source in order to provide the necessary power for the associated computer servers. Data centers meet these power management needs with intelligent PDUs like those designed by STI and Schneider/APC.

         However, a single PDU can only handle a limited number of connected servers/devices before the power draw causes the PDU, and all connected devices, to fail. As with consumer plugstrips, if the devices plugged into an intelligent PDU collectively draw more current/power than the PDU can handle, a current “overload” occurs shutting down every connected device. To warn users of an impending current overload, PDUs have long displayed information about the amount of current being drawn by the PD U.Some early PDUs displayed current information using a single light emitting diode (“LED”) that flashed when the PDU was approaching its current threshold. Other PDU designs, including early designs by APC, used an array of colored lights (green, orange, and red) to indicate current level. In contrast, STI's patented designs claimed in Claim 15 of the ‘543 patent and Claim 15 of the ‘771 patent are for intelligent PDUs that display current information using a digital display: that is, a display that conveys the amount of current being drawn by the PDU in easily readable numerical digits. See ECF No. 724, Ex. 2 (‘543 patent) at Col. 12:21-50; Ex. 3 (‘771 patent) at Col. 12:19-57.

         Between May 12 and May 27, 2015, a jury trial was held on STI's claims that Schneider/APC's challenged product lines infringed Claim 15 of both the ‘543 and ‘771 patent. On May 29, 2014, the jury returned a verdict in favor of STI finding that the product lines infringed STI's patents. ECF No. 590. In response, Schneider appealed the jury verdict to the Federal Circuit. ECF No. 673. On September 23, 2016, the Federal Circuit held that this court's claim construction of the term “plugstrip” as used in the patents-in-suit was erroneous and issued an order partially reversing the jury verdict and remanding the action to this court.[4] See Server Tech., Inc. v. Am. Power Conversion Corp., 657 Fed.Appx. 1030, 1033-34 (Fed. Cir. 2016). Thereafter, Schneider filed the present renewed motion for summary judgment that Claim 15 of both STI's ‘543 and ‘771 patents are invalid as obvious under 35 U.S.C. § 103. ECF No. 718.

         II. Legal Standard

         Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits, declarations, party stipulations, admissions, and other relevant materials in the record fairly establish that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).

         The moving party bears the initial burden of informing the court of the basis for its motion, along with all evidence showing the absence of any genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is “sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001).

         To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine dispute or issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A “material fact” is a fact “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material fact is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the party's position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. See Id. at 252.

         III. Discussion

         In its renewed motion for summary judgment, Schneider seeks an order from the court that asserted Claim 15 of the ‘543 patent and asserted Claim 15 of the ‘771 patent are invalid as obvious under 35 U.S.C. § 103. ECF No. 718. As addressed below, the court agrees and finds that both Claim 15 of the ‘543 patent and Claim 15 of the ‘771 patent are invalid as obvious under Section 103 because a person of ordinary skill in the art would have had a reason to combine the identified prior art to arrive at STI's patented PDU design in order to alleviate known problems in the art including alerting an end-user to a possible current overload condition.

         A. Obviousness Standard

         An issued patent is presumed valid by statute. 35 U.S.C. § 282. However, a patent may be held invalid as a matter of law if it is obvious in light of the prior art. 35 U.S.C. § 103. Specifically, under Section 103 of the Patent Act, a patent may be deemed invalid “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” 35 U.S.C. § 103(a). Put more simply, a patented invention is obvious if a person of ordinary skill in the art would have had a reason to combine the particular elements or technologies already known in the art in the way or manner the claimed invention does. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007).

         Although the ultimate determination of obviousness under Section 103 is a question of law, it is based on several underlying factual findings, including: (1) the scope of the claimed invention; (2) the level of ordinary skill in the pertinent art; (3) the scope and content of the prior art; (4) the differences between the claimed invention and the prior art; (5) the existence of a reason to combine the prior art references; and (6) evidence of secondary considerations such as commercial success, long-felt need, and copying by others. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966); In re Kubin, 561 F.3d 1351, 1355 (Fed. Cir. 2009). A defendant proffering the affirmative defense of obviousness under Section 103 bears the burden to prove that the patented claim is obvious by clear and convincing evidence. Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 962 (Fed. Cir. 2001); Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1365 (Fed. Cir. 1999). For purposes of summary judgment, the evidence, when viewed in the light most favorable to the non-moving party, must support particular findings “as to the reason the skilled artisan, with no knowledge of the claimed invention, would have selected [the identified prior art] for combination in the manner claimed [in the patented design].” In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000).

         B. Claim Language

         Independent Claim 15 of the ‘543 patent discloses:

An electrical power distribution plugstrip connectable to one or more electrical loads in a vertical electrical equipment rack, the electrical power distribution plugstrip comprising in combination:
A. a vertical strip enclosure having a thickness, and a length longer than a width of the enclosure;
B. a power input penetrating said vertical strip enclosure;
C. a plurality of power outputs disposed along an area on a face of said length of the strip enclosure, each among the plurality of power outputs being connectable to a corresponding one of said one or more electrical loads;
D. a plurality of power control relays disposed in said vertical strip enclosure, each among said plurality of power control relays being connected to said power input and to one or more corresponding power ...

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