Inventor-controlled ARSUS LLC has taken another swing against Tesla in its ongoing driver assistance campaign, shifting from the Northern District of California to the Western District of Texas in the process. The plaintiff's second suit against the automaker accuses it of infringing a single patent-the newest to issue in the same asserted family-through the provision of vehicles with the Autopilot driver assistance system, targeting features related to preventing rollover. That complaint comes shortly after ARSUS's first case against Tesla was hobbled by a claim construction order: in February, District Judge Richard Seeborg dismissed the case after the parties jointly stipulated to noninfringement as the result of his ruling that the asserted claims lacked sufficient structure. This is not the first time that ARSUS has seen a case fail due to noninfringement.
The BMW Dealership Suit: No Infringement Under Claims' Plain Meaning
That earlier setback for ARSUS came in the entity's first lawsuit, which targeted not an automaker but a auto dealership: Utah-based John H. Firmage, Inc. (d/b/a BMW of Murray), sued in that state's sole district ( 1:17-cv-00125). The July 2017 complaint accused the dealership of infringing two patents (8,634,989; 9,580,103), respectively the first and third to issue in a family generally related to a vehicle steering control system that limits the steering range to prevent a rollover, over the sale of BMV vehicles with the automaker's Active Driving Assistance Plus (ADAP) system. ARSUS alleged that the accused system automatically prevents vehicles from being steered beyond a certain rollover threshold, but the defendant argued otherwise in a January 2018 motion for summary judgment of noninfringement. Citing the declaration of a BMW of America product manager, the dealership argued that the accused system does not restrict or limit a driver's ability to steer within the vehicle's full range of steering motion, pointing out that the driver can always manually override the system-a fact not contested by the plaintiff. As a result, Firmage asserted that the system does not infringe under the plain meaning of the asserted claims.
District Judge Dee V. Benson agreed in his October 2018 order granting summary judgment, finding that the defendant had sufficiently shown that the ADAP system merely offers "various 'mild torque' steering interventions", and that "none of these features restrict or otherwise limit the driver's ability to steer the vehicle through the entire range of steering motion available in the vehicle, including beyond the rollover threshold". The fact that the ADAP system could be overridden by the driver, the court concluded, was fatal to ARSUS's infringement claims:
While Plaintiff claims that ADAP in the engaged mode prevents the vehicle from being "self-steered" beyond the point of rollover, . . . Plaintiff does not contest that a driver can always manually override the ADAP steering interventions and steer the vehicle beyond the rollover threshold. . . . Simply put, ADAP never actually prevents the vehicle from being steered beyond a rollover threshold at any point, including when ADAP is in the engaged mode. Plaintiff has thus failed to show infringement of the asserted claims.
Judge Benson further held that it was not necessary to formally construe the claims, finding that the plain and ordinary meaning of the language was clear. The Federal Circuit summarily affirmed the resulting summary judgment of noninfringement on appeal in October 2019, denying the plaintiff's motion for en banc and panel rehearing that same November.
The Tesla Litigation: No Infringement Under the Court's Claim Construction Order
ARSUS then turned its attention to Tesla two months later ( 3:20-cv-00313), accusing it of infringing the '989 patent and a more recently issued family member (10,259,494). In June 2020, the company argued in a motion to dismiss that the plaintiff's first amended complaint (the original having triggered a challenge to the sufficiency of the pleadings) had the same flaw as the Firmage case: ARSUS had allegedly conceded that the accused system functioned in "materially" same way as the BMW systems held not to infringe, meaning that the plaintiff had "thus pled itself out of court". Tesla argued that the BMW decision "should not be relitigated here". Judge Seeborg granted that motion in August 2020 but granted ARSUS leave to amend its complaint, which it did a month later.
In that second amended complaint, ARSUS argued that "the asserted patent claims are infringed as long as the apparatus prevents the autopilot from steering the vehicle to the point of rollover" (as characterized in subsequent order; emphasis in original). It was irrelevant that the accused Tesla system does not bar the driver from taking over, alleged the plaintiff, because the driver taking over automatically and instantly turns off the system. ARSUS further observed that nothing in the claims requires that a human driver be prevented from taking the wheel and that the claims did not even mention a human driver at all.
Judge Seeborg addressed that motion in an October 2020 order. Apart from the "somewhat confusing" semantics of ARSUS's argument, the court observed that "it appears likely that it advanced this same theory in the District Court of Utah". However, since Tesla had not asserted that the present case was barred under issue or claim preclusion, and since the matter had to be decided on the pleadings alone, the court declined to dismiss the case-finding that the plaintiff's argument was "not so inconsistent with the language of the claims on their face as to permit resolution at the pleading stage".
By the time the case reached claim construction in mid-2021, Arsus had already disclaimed certain claims from the '494 patent as a result of an inter partes review (IPR2020-00948) filed by Unified Patents (with the district court later remarking that the record was unclear as to whether that patent remained at issue). At that point, the key issue had become the proper construction of claims from the '989 patent, with Tesla arguing that they should be treated as "means-plus-function" claims under 35 USC Section 112(f). ARSUS, for its point, argued that "none of the claims refer to a human driver or should be construed to include a limitation that excludes autonomous systems" (as summarized by the court).
Judge Seeborg resolved that dispute in Tesla's favor in his December 2021 Markman order, ruling that the claims did not recite sufficient structure-and that to conclude otherwise would unduly extend the claims to encompass all rollover systems:
While the claims lack the familiar "means for" language invoking 35 U.S.C. 112(f), they only describe the claimed "apparatus" in terms of its functions, and do not recite structure that performs those functions. Accordingly, the claims must be construed as reaching only the structure described in the specification that correspond to those claimed functions, and any equivalents thereto. Otherwise, the claims would extend to any and every system that performs the function of preventing vehicle rollover. Arsus cannot reasonably claim it has a patent on the basic idea of preventing rollover, without regard to how a particular system attempts to achieve that result.
The identified function, per the court, was "allow[ing] a vehicle to be steered within a non-rollover steering range of motion . . . but prevent[ing] said vehicle from being steered beyond a rollover threshold". Other claims specified additional functions, but each still relied "solely on the word 'apparatus' and the implied steering wheel".
While the court did not find it necessary to refer to the prosecution history to determine that the claims fell under Section 112(f), it nonetheless pointed out that ARSUS had, during prosecution, distinguished prior art as involving "autonomous" steering-thereby suggesting a role for a driver. In one particular example, Judge Seeborg underscored, "the patentee specifically argued that where an autonomous steering system can be overridden by a human driver, the limitations of Claim 14 are not satisfied".
In January 2022, the parties filed a joint stipulation in which they concurred that the accused vehicles do not infringe under the court's Markman order, and agreed not to appeal that order. Neither the stipulation, nor the court's entry of dismissal the following month, specified whether the dismissal was with or without prejudice.
ARSUS's March 2022 West Texas complaint ( 6:22-cv-00276) accuses Tesla of infringing the latest patent to issue in the asserted family (11,077,877). Like the second amended complaint in the just-dismissed California case, the Texas one includes language and supporting evidence apparently intended to defend against arguments regarding the involvement of a driver-including arguments that Autopilot alone steers the accused vehicle when it is enabled; that a driver taking control disables the Autopilot system (i.e., "transitions Autopilot into an inactive mode"); and evidence of publicity purportedly showing that Tesla cars can operate with no driver, or even without any humans in the vehicle at all.
Automotive Update: Federal Circuit Reverses Judge Albright on Venue Ruling Involving Dealerships
Presiding over the latest Tesla case is District Judge Alan D. Albright, who was recently reversed by the Federal Circuit yet again on mandamus on a venue issue in an unrelated automotive campaign. In September 2021, Judge Albright ruled in litigation filed by StratosAudio, Inc. that venue tied to in-district dealerships can be proper-concluding that the dealerships' relationships with automakers, governed mainly by franchise agreements, make those dealerships the agents of the respective automakers, that the automakers ratify the in-district dealerships as their own places of business, and that the dealerships are conducting the business of the automakers in West Texas. However, the Federal Circuit cut through each of those determinations in its In re: Volkswagen decision, ruling instead that StratosAudio "failed to carry its burden to show that the dealerships are agents of Volkswagen or Hyundai under a proper application of established agency law". For that reason, the appellate court determined that the in-district dealerships "do not constitute regular and established places of business of Volkswagen and Hyundai under [Section] 1400(b)", taking instruction from its February 2020 holding in In re: Google (2019-0126).
As noted in RPX's coverage of Volkswagen, the Federal Circuit's ruling may soon have an impact in multiple other campaigns in which litigation had stalled while awaiting that outcome. ripple through other campaigns. That litigation includes cases involving Arigna Technology Limited, an NPE associated with Dublin-based monetization firm Atlantic IP Services Limited, against a fleet of automakers in the Eastern District of Texas. In one of those cases, its suit against BMW, the parties have already begun briefing the impact of Volkswagen. (See here for background concerning that litigation, including how the Volkswagen ruling might reverberate through it.) Additionally, a declaratory judgment action filed against Arigna by two Continental AG companies was stayed in December 2021 pending the outcome of Volkswagen; while no filings referencing the decision have yet been filed, the case will likely not remain dormant for long.
For more on Volkswagen, see "Venue Analysis of Relationships Between Automaker Defendants and In-District Dealerships Led to 'Patently Erroneous Result'" (March 2022).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.