The opinion of the court was delivered by: Matthew F. Kennelly United States District Judge
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge
Rowe International Corp. and Arachnid, Inc. have sued Ecast, Inc., Rock-Ola Manufacturing Corp., and View Interactive Entertainment Corp., claiming that they have infringed six patents owned by Arachnid and licensed to Rowe: U.S. Patent Nos. 5,355,302, 5,781,889, 6,397,189, 6,381,575, 5,848,398, and 6,970,834 (the Arachnid patents). Rowe also asserts that defendants have infringed U.S. Patent No. 6,598,230. Ecast has counterclaimed against AMI Entertainment, Inc. for infringement of U.S. Patent No. 5,341,350. The case is before the Court on the parties' respective motions for summary judgment on certain claims, defenses, and counterclaims. For the reasons set forth below, the Court grants plaintiffs' motion in part and denies it in part and denies defendants' motion.
The basic facts surrounding this litigation are set forth in some detail in the Court's prior opinions. See, e.g., Rowe Int'l Corp. v. Ecast, Inc., 241 F.R.D. 296, 298-99 (N.D. Ill. 2007). The Court will restate them only briefly here. Each of the patents-in-suit involves computer jukeboxes and computer jukebox networks. Prior to the development of computer jukebox systems, conventional jukeboxes contained vinyl records, compact discs, or digital music files. These conventional systems required the jukebox to house all the songs available for selection, thereby requiring the jukebox operator to visit each jukebox to update the music available. The operator also would visit the jukeboxes to collect money, information regarding how often songs were played, and other data. The song selections necessarily were limited by the storage space available at each jukebox.
The computer jukeboxes that are the subject of the patents at issue in this case have a central management station that can distribute digital music to multiple jukeboxes. The central management station also stores advertisements and other information that can be transmitted to the jukeboxes. The computer jukebox system also allows the jukeboxes to store certain songs (for example, those that are frequently played), so that they do not have to be transmitted from the central management station repeatedly. In addition, the central management station can collect data regarding the songs being played, fees collected, etc., thereby eliminating the need for an operator to regularly visit each computer jukebox.
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). When determining whether a genuine issue of material fact exists, the Court must view the facts in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002). Because the Court is presented with cross-motions for summary judgment in this case, it must consider each party's motion separately and draw all reasonable inferences against the party whose motion is under consideration. See Crespo v. Unum Life Ins. Co. of Am., 294 F. Supp. 2d 980, 991 (N.D. Ill. 2003) (citing Brownlee v. City of Chicago, 983 F. Supp. 776, 779 (N.D. Ill. 1997)).
I. Plaintiffs' Motion for Summary Judgment
Plaintiffs move for summary judgment on infringement of claims 1 through 6 of the '189 patent, claims 1 through 6, 9 through 11, 15, and 21 through 21 of the '575 patent, defendants' inequitable conduct defenses, and the invalidity of the '350 patent, certain claims of which Ecast asserts in its infringement counterclaim.
A. Possibility of Direct Infringement of the '189 and '575 Patents
The Court begins with a point to which the parties devote relatively little attention. Defendants argue that the Court should deny summary judgment as to infringement of claim 1 of the '189 patent and claims 1, 15, and 22 of the '575 patent because no one defendant directly infringes any of these claims, in the sense of practicing every element of the claim. See Warner-Jenkinson Co., Inc. v. Hilton Davis Corp., 520 U.S. 17, 40 (1997). Defendants contend that Rock-Ola and View make jukebox components and that Ecast contributes a memory "that makes the system work" as well as a network. Def. Opp. Br. at 4. The operators of the individual jukeboxes put all of these things together "to create a working system," id., defendants say, likening them to the surgeons in Cross Medical Products v. Medtronic Sofamor Danek, 424 F.3d 1293 (Fed. Cir. 2005). In that case, the Federal Circuit refused to combine the surgeons' actions with those of the defendant medical device maker to find direct infringement of the patentees' apparatus claim. Id. at 1311; see also Muniauction, Inc. v. Thomson Corp., __ F.3d __, 2008 WL 2717689, at *8-9 (Fed. Cir. July 14, 2008) (citing BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373, 1380-81 (Fed. Cir. 2007)).
Plaintiffs respond that the only issue in the case now is whether the asserted claims are infringed, not whether the alleged infringement is direct, contributory, or induced. The latter determination can come later, plaintiffs say.
There are two interrelated problems with defendants' attempts to resist summary judgment on this basis. First, the record does not support defendants' assertion that no one of them makes, uses, or sells "a complete jukebox system." Def. Opp. Br. at 4. Specifically, the record includes an Ecast technical and promotional document setting out "the architecture of the major components" of the Ecast Jukebox & Network 2.5, which by its own terms is aimed at Ecast's customers (as well as its "partners" and technical employees). Pl. Statement of Facts, Ex. 8 at E009012. The first sentence of this document's overview section describes the Ecast system as a "wide area network consisting of consumer entertainment Jukebox units . . . and a Data Center." Id. at E009016. The record also includes a 2005 proposal in which Ecast lists as the "main components of [its] system" digital jukebox hardware along with its software for jukeboxes, servers, and route management. Id. at E020984. Thus, in Ecast's own view of the system it markets to its customers, the jukeboxes that are supplied by Rock-Ola and View-under manufacturing and distribution contracts with Ecast, see id., Ex. 15 at 21-are part of the same system as the data center Ecast itself operates. Defendants are not entitled to denial of plaintiffs' summary judgment motion on the ground that no one of them directly infringes the asserted patents.
Alternatively, even if it were not clear from the record that Ecast markets and sells a "complete jukebox system" to its customers, Cross Medical Products and Federal Circuit cases that have followed it hurt rather than help defendants. In BMC Resources, an important Federal Circuit decision on this point handed down last year, the court held that a defendant was not liable for direct infringement of the asserted patent, which disclosed a multi-step method for processing debit transactions, because it did not control every step in the process and thus did not practice each and every element of the claimed invention. BMC Resources, 498 F.3d at 1380. In doing so, the Federal Circuit rejected the argument that dicta in On Demand Machine Corp. v. Ingram Indus., Inc., 442 F.3d 1331, 1334-35 (Fed. Cir. 2006), had altered the law regarding direct infringement by more than one actor. The court reaffirmed that
[i]nfringement requires, as it always has, a showing that a defendant has practiced each and every element of the claimed invention. This holding derives from [35 U.S.C. § 271(a)] itself . . . Where a defendant participates in infringement but does not directly infringe the patent, the law provides for remedies under principles of indirect infringement. However, this court has held that inducement of infringement requires a predicate finding of direct infringement.
BMC Resources, 498 F.3d at 1380 (internal citations omitted).
At the same time, however, the Federal Circuit acknowledged that a defendant "cannot avoid infringement . . . simply by contracting out the steps of a patented process to another entity." Id. at 1381. Liability for direct infringement, the court said, would exist for the "mastermind" that controlled such an arrangement. Id. Thus, the test under BMC Resources is whether one party effectively controls or directs others such that it can be said to practice every element of the asserted claims. See Muniauction, 2008 WL 2717689, at *8 (citing BMC Resources, 498 F.3d at 1380-81). The Federal Circuit has held in several cases, including Cross Medical Products, that a defendant did not exert sufficient control over other entities whose actions contributed to the asserted infringement to ground such a finding. Cross Med. Prods., 424 F.3d at 1311 ("if anyone makes the claimed apparatus, it is the surgeons, who are, as far as we can tell, not agents of [defendant medical device maker] Medtronic"); see also Muniauction, 2008 WL 2717689, at *9 ("[t]hat Thompson[, an auctioneer,] controls access to its system and instructs bidders on its use is not sufficient to incur liability for direct infringement"); BMC Resources, 498 F.3d at 1381-82 (although defendant Paymentech provided certain data to debit networks, "absent any evidence that Paymentech also provides instructions or directions regarding the use of those data," there could be no inference of direct infringement); Fromson v. Advance Offset Plate, Inc., 720 F.2d 1665, 1568 (Fed. Cir. 1983); cf. Shields v. Halliburton Co., 493 F. Supp. 1375, 1389 (W.D. La. 1980) (direct infringement where one step of the asserted method claim was performed at the direction of, though not by, a particular defendant).
In contrast to these cases, the record in this case includes indicia of direction and control by Ecast over Rock-Ola and View with regard to the alleged infringement. As an initial matter, the focus is properly on Rock-Ola and View and not, as defendants suggest by citing to Cross Medical Products, on jukebox operators (e.g., bar and restaurant owners). The claimed invention in Cross Medical Products required an "anchor set being in contact with bone[, a step that] is absent until the screw and anchor are put in place during surgery." Cross Med. Prods., 424 F.3d at 1311. Defendants in this case likewise suggest that only upon assembly-that is, insertion of Ecast's disk drive into the jukebox hardware-by a jukebox operator could there be infringement of the asserted claims.
The analogy to Cross Medical Products does not hold up. In that case, the Federal Circuit construed the limitation "operatively joined" in the asserted claim to require contact with bone. Because Medtronic itself did not perform surgery and because the surgeons who might join Medtronic's accused product to bone in the course of surgery were not Medtronic's agents, Medtronic did not directly infringe. Id. In this case, in contrast, there is no construction requiring assembly of the computer jukebox in the manner that defendants say makes for a "working system." Def. Opp. Br. at 4. Nor do defendants argue for such a construction. Thus, the focus is on the defendants and not on the actions of jukebox operators.
The indicia of direction and control go beyond what was present in BMC Resources, Cross Medical Products, and other cases in which patentees failed to establish "mastermind"-level direction of participants in the alleged infringing activities. Specifically, the record discloses that Ecast has manufacturing and distribution contracts with both Rock-Ola (since September 2003) and View (since April 2005). Pl. Statement of Facts, Ex. 15 at 21; cf. BMC Resources, 498 F.3d at 1382 (noting that the record "contained no evidence even of a contractual relationship" between defendant and other participants in the alleged infringement). Ecast regarded View and Rock-Ola as "partners" that, pursuant to these manufacturing contracts, made jukeboxes specifically designed to operate with Ecast's network service. Id., Ex. 9 at 57. According to Ecast's Howard Spielman, these manufacturers "produce jukeboxes for us," meaning Ecast. Id. (emphasis added). Spielman also testified that Ecast has also prescribed to Rowe and View "reference designs"-in essence, technical specifications, though Spielman declined to adopt that term-that concern "the computing resources available to the juke[box], which makes our software network successful." Id. at 136-137, 139. In one example of these reference designs, Ecast specifies that
[t]he hardware drivers installed within the Ecast image are written to communicate with an Elo Intellitouch Serial Controller. While Ecast can be flexible to meet the demands of manufacturing, all changes must be approved by Ecast . . . .
Def. Resp. Statement of Facts, Ex. 59 at E020996. Thus, the record indicates that Ecast literally contracted out to Rock-Ola and View the jukebox hardware element of the asserted claims. See Pl. Statement of Facts, Exs. 22 & 23.
There is no suggestion that these firms were independently making jukeboxes that would work with the Ecast system. On the contrary, at least under the original contract with Ecast, View was required to obtain Ecast's permission to manufacture jukeboxes for the Ecast network, according to Spielman. See id., Ex. 9 at 130-31.
In sum, even if Ecast did not provide its customers with a complete system that integrates jukebox hardware, there is evidence from which a jury reasonably could find that the other defendants' manufacturing of jukebox hardware was subject to Ecast's direction and control. Accordingly, the Court rejects defendants' argument that summary judgment should be denied because a finding of direct infringement is impossible.
B. Plaintiffs' Request to Strike Dr. Meldal's Declaration
Plaintiffs raise a threshold issue regarding defendants' opposition to their motion for summary judgment on infringement of the '189 and '575 patents: namely, the admissibility of a declaration by defendants' expert, Dr. Sigurd Meldal, that accompanied defendants' opposition brief. Plaintiffs argue this new declaration departs sufficiently from the non-infringement opinions and supporting analyses in Meldal's October 2007 report that it violates both the Court's expert discovery scheduling order and Federal Rule of Civil Procedure 26(a)(2)(B) and (C), which require disclosure of expert opinions and supporting analyses during discovery at the time ordered by the Court, and so should be stricken under Rule 37.*fn1
Rule 26(a)(2)(B) provides that disclosure of the identity of a witness who will provide expert testimony shall . . . be accompanied by a written report . . . contain[ing] a complete statement of all opinions to be expressed and the basis and reasons therefor; the data or other information considered by the witness in forming the opinions [and] any exhibits to be used as a summary of or support for the opinions. Rule 26 thus gives the opposing party "a right to know the conclusion of [a] particular expert witness" with respect to a particular issue. Salgado v. Gen. Motors Corp., 150 F.3d 735, 742 (7th Cir. 1998).*fn2 Expert reports must disclose how and why an expert reached the conclusions presented, and not merely the result. Id. at 741 n.6 (citing Reed v. Binder, 165 F.R.D. 424, 429 (D.N.J. 1996)); see also Chappel v. SBC-Ameritech, No. 05 C 7003, 2007 WL 2076028, at *3 (N.D. Ill. July 13, 2007) (basis and reasons for an expert's conclusions are "the very heart of expert disclosure" under Rule 26). Unsurprisingly, expert submissions in the form of new claim constructions fall within the rule's scope. See, e.g., Briggs & Stratton Corp. v. Kohler Co., 398 F. Supp. 2d 925, 932-33 (W.D. Wis. 2005).
The primary rationale for excluding untimely expert opinions is to avoid an unfair "ambush" in which a party advances new theories or evidence to which its opponent has insufficient time to formulate a response. Salgado, 150 F.3d at 741 n.6; see also Finley v. Marathon Oil Co., 75 F.3d 1225, 1230-31 (7th Cir. 1996) (experts' new charts "disclosed only a few days before the start of the trial would have placed on [the opponent] a heavy burden of meeting the new evidence at trial with its own experts' analysis"); Astrazeneca AB v. Mutual Pharm. Co., Inc., 278 F. Supp. 2d 491, 509-10 (E.D. Pa. 2003); Smithkline Beecham PLC v. Teva Pharms. USA, Inc., Nos. 04-0215, 05-0536, 2007 WL 1827208, at *3 (D.N.J. June 22, 2007).
This rationale is reflected in Rule 37's safety-valve provision for admission of expert testimony omitted from initial Rule 26(a) disclosures when its admission is "substantially justified" or "harmless." Fed. R. Civ. P. 37(c)(1). It is also reflected in the Seventh Circuit's guidance on applying the Rule 37(c)(1) sanction. Though district courts have broad discretion to impose this sanction for violations of Rule 26(a), their exercise of this discretion is guided in this Circuit by four interrelated factors: "(1) the prejudice or surprise to the party against whom the evidence is offered; (2) the ability of the party to cure the prejudice; (3) the likelihood of disruption to the trial; and (4) the bad faith or willfulness involved in not disclosing the evidence at an earlier date." David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003).
Although trial in this case is still some time off, there is nonetheless a risk of substantial prejudice from failures to observe discovery deadlines. Patent litigation is typically complex and correspondingly expensive for the litigants, and this case is no exception. Moreover, summary judgment motions are the norm, as both sides in this case have shown with their lengthy motions seeking summary disposition of multiple issues. Rule 26(a)(2)(C) specifically allows the Court to set a schedule that requires expert disclosures earlier than the default of ninety days before trial. This is precisely what the Court did in this case, with the parties' agreement and only after extensive and painstaking consultation, with an eye toward the likelihood of the very summary judgment motions that the parties have now filed. Thus, the purpose of the discovery deadlines set by the Court was to have the evidence-including expert evidence, on which both sides rely heavily-exchanged well in advance of both the summary judgment deadline and the trial date, so that the parties would know where they stood on the issues. Thus, the risk of "ambush" is not lessened in this case simply because we are not yet on the eve of trial.
Applying the above principles to this case, the Court determines that the majority, but not all, of Meldal's declaration submitted with defendants' opposition brief is new for Rule 26(a) purposes. Accordingly, these portions are stricken under Rule 37(c)(1).
As noted, the basis for plaintiffs' request, reflected in their opposition to defendants' summary judgment motion and the cases plaintiffs cite there, is that Meldal's opinions in his declaration depart substantially from the ones he submitted within the Court's time frame for expert discovery. See Trilogy Commc'ns, Inc. v. Times Fiber Commc'ns, Inc., 109 F.3d 739, 744 (Fed. Cir. 1997) (applying Fifth Circuit law) (upholding district court's exclusion of supplemental expert report, filed after expert discovery deadline, that "contained new opinions and information and did not merely supplement the original report"); Danis v. USN Commc'ns, Inc., 121 F. Supp. 2d 1183, 1189 (N.D. Ill. 2000) (plaintiffs' expert's affidavit, submitted after expert discovery deadline and after defendant had moved for summary judgment, "directly contradict[ed] his deposition testimony" and expert report).*fn3 Plaintiffs call Meldal's opinions and analyses "late expert testimony first submitted during summary judgment" and contend they were "never presented during discovery" in violation of Rule 26(a). Pl. Reply at 2. By the same token, if the opinions and analyses offered by Meldal in this summary judgment phase do not differ substantially from his opinions offered in his expert report of last autumn, they are not "late" for purposes of Rule 26(a), and thus there is no risk of "ambush" and no reason to exclude Meldal's declaration. See Solaia Tech. LLC v. ArvinMeritor, Inc., 361 F. Supp. 2d 797, 807 (N.D. Ill. 2005) ("[i]f the late-filed opinions are new, they must be stricken . . . Thus, the Court's first step is to determine whether the statements by [the expert] are new or contradictory opinions.").
1. Meldal on Non-Infringement of the '189 Patent
In his October 2007 non-infringement report, Meldal opines as follows with respect to the asserted claims of '189 patents:
* The requirement, in independent claims 1 and 7, that the jukebox memory include instructions for causing the processor to "respond to" the data it receives to "control" the data's storage means these instructions prescribe "using the song size to determine where to store the file in advance of downloading the file . . . such that file storage is optimized." Meldal Resp. Expert Report ¶ 37. Meldal draws this optimization-or "efficient storage"-requirement from another of the Arachnid patents, from whose application the '189 patent "descend[s]." Id. ¶ 35. Meldal accords song size a key role in storage based on a passage in the '189 patent's specification. Defendants' products, Meldal opines, do not reflect any concern for storage optimization because storage has become much cheaper since the Arachnid patents were filed. Defendants' products use a file system that "does not analyze the disk storage to determine how best to maximum [sic] storage [but simply] places the data on the first available 'clusters' of fixed-size blocks" of memory. Id. ¶ 41. Thus, in Meldal's opinion, Ecast-powered jukeboxes do not include instructions that cause the processor to respond to data so as to control the data's storage.
* The limitation, in independent claim 7, that the management station processor compress digital song data stored in the management station's memory unit is not infringed by defendants' products because "the compression of the music [transmitted to Ecast-powered jukeboxes] occurs on a system separate from the system used to transmit the song data to Defendants' jukeboxes." Id. ¶ 46. Ecast receives files in compressed form from the major record labels that supply ninety percent of Ecast's content; the other ten percent, from independent labels, is "ripped" from compact discs and compressed by an Ecast technician on computers not involved in the transmitting song data to Ecast-powered jukeboxes. Id. ¶ 45.
Meldal's declaration, submitted with defendants' opposition to plaintiffs' summary judgment motion, contains the following opinions with regard to the asserted claims of the '189 patent:
* Defendants' products do not control the storage of data they receive according to song size. Though the processor found in defendants' products "flag[s] the files within the directory by 'album' and 'artist name,'" it "does not respond to anything in the song data to 'control the storage.'" Meldal Summ. Judg. Opp. Decl. ¶ 6.
* "[T]he song catalog maintained on [Ecast-powered] jukeboxes and displayed to users . . . is not limited to what is available on the jukebox itself" but rather displays all licensed songs in the "Ecast repository" irrespective of their storage location. Id. ¶ 7. Meldal does not say which claims of the '189 patent this opinion affects; rather, he says only that "[t]he Ecast system is . . . fundamentally different than the inventions claimed" by both the '189 and the '575 patents in this respect. The Court understands this opinion to bear on independent claims 1 and 7, which disclose "a library of songs stored in the computer jukebox."
* Ecast-powered jukeboxes "do not contain identity data for each of the songs stored" because they are "designed to include song files . . . stored on a jukebox that may not be . . . displayed to an end-user-if [Ecast's] rights to that music have been lost and the song catalog is updated." Id. ¶ 8. Meldal's opinion on this point is not a model of clarity, but it cites to a segment of the deposition of Ecast's Howard Spielman in which Spielman explains that "[w]e have more music in our database than we make available to our jukeboxes . . . Digital rights are constantly being won and lost . . . [W]e will often acquire music in advance of our legal right to distribute it." Pl. Statement of Facts, Ex. 9 at 78:14-79:1. The thrust of Meldal's position, then, is that identifying data for songs that are available for play through an Ecast-powered jukebox are not necessarily displayed on those jukeboxes because Ecast may not have the right to make that file available to users. Meldal does not say which of the asserted claims would not be infringed under this opinion. The Court assumes that Meldal is referring to independent claims 1 and 7, both of which call for "a data storage unit for storing . . . the received song identity data for each of the songs stored." Ecast's song catalog does not incorporate the song size, song address, graphics address, or graphics size fields shown in figure 2 of the '189 patent.
* Ecast's catalog "is created independently of the songs present on any particular jukebox hard drive." Meldal Summ. Judg. Opp. Decl. ¶ 9. In contrast, plaintiffs' jukeboxes "present the end-user with the library of songs stored locally on the jukebox memory, which is a subset of the available songs maintained in the 'master library.'" Id. ¶ 10. Meldal does not say which of the asserted claims this opinion affects. The Court assumes that Meldal is again referring to independent claims 1 and 7.
* The displays used in Ecast-powered jukeboxes are "off-the-shelf" displays and are not "adapted for showing . . . user attract data." Id. ¶ 13. Again, Meldal does not say which of the asserted claims would not be infringed under this opinion. The Court assumes here as well that Meldal means independent claims 1 and 7, both of which call for "a display adapted for showing . . . user attract data and information that identifies the songs" stored on the jukebox."
Comparing the two sets of opinions, the Court determines first that Meldal's opinion regarding song size in the declaration is sufficiently consonant with his opinion found in paragraphs 34-41 of his non-infringement report that it is not new. If anything, it is the same opinion as the one presented in Meldal's non-infringement report, minus the storage optimization element. Accordingly, the Court will not strike paragraph 6 of Meldal's declaration for purposes of plaintiff's summary judgment motion for infringement of the '189 patent.
For purposes of plaintiff's summary judgment motion for infringement of the '189 patent, the Court determines that the following paragraphs and portions thereof in Meldal's declaration are new and will be stricken under Rule 37(c)(1):
* paragraph 7, regarding the song catalog displayed to jukebox users.
* paragraph 8, regarding Ecast-powered jukeboxes' song catalogs and "digital rights." Although the opinion draws on Spielman's deposition testimony, this is insufficient on its own to apprise plaintiffs that Meldal would advance an expert opinion on this point.
* the portion of paragraph 9 regarding the data fields shown in figure 2 of the '189 patent. the portion of paragraph 9 regarding how Ecast's song catalog is created and all of paragraph 10, which contrasts this with the song catalogs presented by plaintiffs' jukeboxes.
* paragraph 13, regarding Ecast's use of "off-the-shelf" displays. Defendants do not offer any argument that their late disclosure of these opinions is harmless or substantially justified under Rule 37(c)(1)-although, to be fair, plaintiffs' arguments seeking exclusion of Meldal's new opinions were made only in plaintiffs' reply brief (after defendants included the new declaration with their response brief), to which defendants did not have an opportunity to reply within the briefing schedule. Nonetheless, the Court determines that these late disclosures are neither harmless nor substantially justified. Plaintiffs are confronted new analyses whose underlying rationales and potential weaknesses they cannot explore without re-deposing Meldal. As the Court has pointed out, a key aim of the setting the discovery schedule it did in this case was to have all the evidence exchanged-notably, expert evidence-well in advance of the deadline for summary judgment motions. Nor does the Court see any reason Meldal could not have formulated and defendants disclosed these opinions within the deadline agreed to by the parties. The infringement issue was in the case at the time he submitted his original report, and there is no suggestion that he did not then have access to the materials on which he bases his new opinions.
The Court also declines to penalize plaintiffs for making a detailed rebuttal of Meldal's new non-infringement opinions in tandem with their request to strike. Cf. Smithkline Beecham, 2007 WL 1827208, at *3-4 (noting that plaintiff, "in [its] motion to strike, attacked the conclusions made by [defendant's expert] on the merits suggesting that [it] was not caught off-guard or unable to respond due to the timing of the information"). The innocent party should not, by prudently making the alternative argument that the new expert opinions are wrong on the merits, put itself at risk of a resulting finding of harmlessness under Rule 37. The significant new portions of Meldal's declaration violate the Court's deadline for expert disclosures-a critical tool for efficient management of litigation, see Serrano-Perez v. FMC Corp., 985 F.2d 625, 628 (1st Cir. 1993)-and appear to the Court to be part of a deliberate effort on defendants' part to revise and expand their non-infringement positions at the summary judgment phase. For these reasons, the discovery sanction under Rule 37(c)(1) is warranted.
2. Meldal on Non-Infringement of the '575 Patent
In his October 2007 non-infringement report, Meldal opines with respect to the asserted claims of the '575 patent as follows:
* The requirement, in independent claims 1 and 15 of the '575 patent, of a processor "operative to store the digitized song data and the song identity data" means, Meldal opines, that the processor "must store the song data in an efficient manner." Meldal Resp. Expert Report ¶ 51. Defendants' products do not store data in this way. Meldal expressly adopts the "efficient storage" reasoning used in his opinion on the '189 patent: storage optimization is required by a predecessor Arachnid patent application, song size is the key to efficient storage, and defendants' products do not reflect a concern for this kind of storage optimization because the cost of storage has fallen since the Arachnid patents were filed.
* The requirement, in independent claims 9 and 15, of a management station whose processor transmits song data and song identity data is not met by the defendants' products because "[o]ne computer does not perform both functions" in the Ecast system. Id. ¶ 60. Rather, "Ecast uses two separate mechanisms for distributing 'song data' . . . and 'song identity data.'" Id. ¶ 56. Meldal states that song data is transmitted through the Ecast system by large, dispersed server systems managed by outside contractors. Meldal's view is that plaintiffs' infringement expert, Dr. Dickinson, "incorrectly . . . lumps this vast system of servers together" by labeling it a unitary "management station." Id. ¶ 59.
In his declaration, Meldal states as follows with regard to the asserted claims of the '575 patent:
* Defendants' products do not optimize the storage of data they receive according to song size. See id. ¶ 6. The Court understands this opinion to bear on independent claims 1 and 15 of the '575 patent.
* Ecast-powered jukeboxes' song catalogs displays all licensed songs available on the Ecast network, irrespective of their storage location, and are not limited to the songs stored on a given jukebox. Id. ¶ 7. Meldal does not say which claims of the '575 patent this opinion affects; rather, he says only that "[t]he Ecast system is . . . fundamentally different than the inventions claimed" by both the '189 and the '575 patents in this respect. The Court understands Meldal's opinion on this point to bear on independent claims 1 and 15.
* Ecast's song catalog does not incorporate the song size, song address, graphics address, or graphics size fields shown in figure 2 of the '575 patent.
* Ecast's catalog "is created independently of the songs present on any particular jukebox hard drive." Id. ¶ 9. In contrast, plaintiffs' jukeboxes "present the end-user with the library of songs stored locally on the jukebox memory, which is a subset of the available songs maintained in the 'master library.'" Id. ¶ 10. The Court understands Meldal to be referring to independent claims 1, 9, and 15, all of which disclose the transmission or receipt of "digitized song data and an associated song record." It is the association of song data and song record that Meldal says is not present in defendants' products.
* In the Ecast system, no single processor or computer retrieves and transmits song and song identity data to networked jukeboxes, as Meldal reads claim 15 of the '575 patent to require. Instead, "Ecast employs server farms at several locations using hundreds, or even thousands of processors" for these tasks. Id. 11.
* "Ecast does not create the 'song record' required by the claims of the '575 patent. The claims require a song record 'built' from the songs stored on the jukebox. Ecast does not create its catalog that way." Id. ¶ 12. That is, Meldal reads the '575 patent-he does not specify which claims, but the Court assumes he means claims 9 and 15-to require a song record built from those songs present in the memory of a given jukebox.
* The displays used in Ecast-powered jukeboxes are "off-the-shelf" displays and are not "adapted for showing . . . user attract data." Id. ¶ 13. Again, Meldal does not say which of the asserted claims of the '575 patent would not be infringed under this opinion. The Court assumes that Meldal means independent claims 1 and 15, both of which call for "a display adapted for showing songs selections based on the song identity and a user-attract mode."
* The RAID (for redundant arrays of inexpensive disks) storage on which Ecast's servers store data are not "adapted for storing user attract data." RAID storage is "generic" and therefore suited for storing any kind of data, which is precisely why Ecast uses it: Ecast "makes a point of using standard technologies." Id. ¶ 14. Once again, Meldal does not specify which of the asserted claims would not be infringed under this opinion. This time, however, the Court cannot find corresponding claim language. Moreover, Meldal's opinion on this point has no counterpart in defendants' opposition brief. Nor is this paragraph of Meldal's declaration cited in the brief.
* The servers that make up Ecast's distribution system "use standard components and technologies, and are not 'adapted for transmitting user attract data.'" Id. ¶ 15. As before, Meldal does not say and the Court has been unable to determine what claim language, if any, corresponds to this opinion. No related argument or citation to this paragraph of Meldal's declaration appears in defendants' opposition brief.
Comparing the two documents, the Court again determines that Meldal's opinion regarding song size in paragraph 6 of the declaration is sufficiently consonant with his opinion found in paragraphs 50-54 of his non-infringement report that it is not new. If anything, it is the same opinion as the one presented in Meldal's non-infringement report, minus the storage optimization element. Accordingly, the Court will not strike paragraph 6 of Meldal's declaration for purposes of plaintiffs' summary judgment motion on infringement of the '575 patent.
In addition, the Court determines that paragraph 11 of Meldal's declaration is sufficiently consonant with the opinion expressed in paragraphs 55-60 of his non-infringement report that it is not new. There is, to be sure, some difference between the two. In paragraph 11 of his declaration, Meldal says that the processor disclosed by the '575 patent should be construed to mean a single CPU, whereas the Ecast network draws on "server farms . . . using hundreds, or even thousands, of processors." In his non-infringement report, Meldal refers to this multitude of servers, but emphasizes that "[o]ne computer does not perform both functions"-i.e., transmitting song data and song identity data-in the Ecast system. Meldal Resp. Expert Report ¶ 60. This difference notwithstanding, Meldal's basic point in both statements is that the infrastructure by which data is transmitted to the networked jukeboxes in the parties' respective systems differs and that the multiple servers used by Ecast make a difference. Thus, the Court declines to strike paragraph 11.
The Court determines that all other paragraphs of Meldal's statement identified above are new for Rule 26(a) purposes. For the reasons given above outlining the lack of substantial justification and prejudice to plaintiffs, these paragraphs are stricken. Because the Court is striking most of Meldal's declaration, it will only consider those new positions to the extent that they have support elsewhere in the record.
C. Infringement of the '189 Patent
The arguments over infringement of the '189 patent focus on claim 1, the only independent claim at issue in that patent. Claim 1 discloses
[a]n improved computer jukebox for playing songs selected by users of the computer jukebox from a library of songs that have been digitally compressed and stored in the computer jukebox, where the library of songs stored in the computer jukebox is capable of being updated upon the receipt of compressed digital song data, which represents at least one songs, and upon the receipt of song identity data, which represents the identity of each such song, the computer jukebox comprising: a communication interface for receiving the compressed digital song data and the song identity data; a data storage unit for storing the received compressed digital song data and the received song identity data for each of the songs stored; a display for showing, to prospective user [sic] of the computer jukebox, information identifying the songs for which digital song data is stored in the data storage unit and that is based on song identity data; selection keys responsive to a selection of a song to be played on the computer jukebox from the song identity information displayed on the display, the selection keys including a signal output representing activation of the selection keys; at least one audio speaker; a processor connected to a memory, the memory including a decompression algorithm for decompressing compressed digital song data; a digital to analog converted coupled between the processor and the audio speaker to convert digital song data to an analog signal coupled to the speaker; and wherein the memory further includes instructions for: causing the processor, in response to the signal output, to access and process compressed digital song data retrieved from the data storage unit so that the accessed compressed digital song data corresponds to the song selected by the selection keys; causing the processor to decompress the accessed compressed digital song data and send the decompressed digital song data to the digital to audio converter so that the song selected is played on the computer jukebox as a result of the corresponding stored compressed song digital data being decompressed and converted by the processor and the digital to analog converter; and causing the processor to respond to compressed digital song data and to song identity data, which may be received by the communication interface of the computer jukebox, to control the storage of the received compressed digital song data and the received song identity data in the data storage unit to create an updated library of songs stored in the computer jukebox.
1. "To Control the Storage"
In support of their motion, plaintiffs point to their expert's claim charts, which reflect that the Ecast processor controls data storage, as required by the last sub-element of claim 1. Defendants counter that plaintiffs have not submitted evidence that the processors used in the Ecast system "respond to compressed digital song data and to song identity data" they receive "to control the storage" of that data, as that sub-element provides. In the Ecast system, defendants say, the processor simply stores this data in the jukeboxes' memory "incrementally as it is received," Def. Opp. Br. at 6, without any response beyond relaying the data and without controlling anything. The claim language must be read to require more than that, ...