Case 2:15-Cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 1 of 33 Pageid #: 567
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Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 1 of 33 PageID #: 567 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION PERSONALIZED MEDIA § COMMUNICATIONS, LLC, § § Case No. 2:15-cv-01366-JRG-RSP Plaintiff, § § vs. § § Jury Trial Demanded APPLE, INC., § § Defendant. § FIRST AMENDED COMPLAINT FOR PATENT INFRINGEMENT Plaintiff Personalized Media Communications, LLC (“PMC” or “Plaintiff”), by and through its attorneys, hereby demands a jury trial and complains of Defendant Apple, Inc. (“Apple” or “Defendant”) as follows: NATURE OF THE ACTION 1. This is an action for patent infringement arising under the patent laws of the United Sates, 35 U.S.C. §§ 271, et seq., to enjoin infringement and obtain damages resulting from Apple’s unauthorized manufacture, use, sale, offer to sell and/or importation into the United States for subsequent use or sale of products, methods, processes, services and/or systems that infringe one or more claims of United States Patent No. 8,191,091 (the “’091 Patent”) (attached as Exhibit A) entitled “Signal Processing Apparatus and Methods,” United States Patent No. 8,559,635 (the “’635 Patent”) (attached as Exhibit B) entitled “Signal Processing Apparatus and Methods,” United States Patent No. 7,752,649 (the “’649 Patent”) (attached as Exhibit C) entitled “Signal Processing Apparatus and Methods,” and United States Patent No. 8,752,088 (the “’088 Patent”) (attached as Exhibit D) entitled “Signal Processing Apparatus and Methods.” PMC seeks injunctive relief to prevent Defendant from continuing to Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 2 of 33 PageID #: 568 infringe PMC’s patents. In addition, PMC seeks a recovery of monetary damages resulting from Defendant’s past infringement of these patents. 2. This action for patent infringement involves Defendant’s manufacture, use, sale, offer for sale, and/or importation into the United States of infringing digital rights management (DRM) technology, including, but not limited to, DRM technology known as FairPlay, which is used at least by Defendant’s QuickTime and iTunes/App Store/Apple Music multimedia software which software in turn is used by, for example, Defendant’s iPhone, iPad, iPod, MacOS X devices, Apple TV, iTunes Store, App Store and iBooks (collectively, “Client Devices”) in connection with Defendant’s distribution of encrypted digital content, including but not limited to, software (“apps”), iBooks, audio books, TV programs, movies and music, and other content (collectively, “Content”) to authorized user devices. For example, FairPlay- encrypted content may be purchased through Defendant’s iTunes Store or App Store, using Defendant’s software, including but not limited to, the iTunes, App Store, and Apple Music applications. The iTunes software, App Store software, Apple Music, and Defendant’s QuickTime multimedia software utilize built-in FairPlay DRM technology to decrypt and play or store the encrypted files. This action for patent infringement also involves Defendant’s manufacture, use, sale, offer for sale, and/or importation into the United States of infringing technology that enables the streaming and/or download of video and other forms of Content to Client Devices. Collectively, the unauthorized infringement set forth here and elsewhere is referred to as the “Accused Products and Services.” THE PARTIES 3. PMC is a limited liability company duly organized and existing under the laws of the State of Texas, with its principal place of business in Sugar Land, Texas. -2- Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 3 of 33 PageID #: 569 4. Defendant is a California corporation with its principal place of business at 1 Infinite Loop, Cupertino, CA 95014. Defendant has designated CT Corporation System, 1999 Bryan Street, Suite 900, Dallas, Texas 75201 as its registered agent for service of process. JURISDICTION AND VENUE 5. This Court has jurisdiction over the subject matter of this patent infringement action pursuant to 28 U.S.C. §§ 1331 and 1338(a). 6. Defendant is subject to personal jurisdiction in this judicial district and division because it regularly transacts business in this judicial district and division by, among other things, selling and offering for sale its products and services, including the Accused Products and Services, to customers located in this judicial district and division. In addition, Defendant has committed acts of direct infringement, contributory infringement and/or inducement of infringement, of one or more of the claims of the patents-in-suit in this judicial district and division. 7. Venue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391(b), (c) and 1400(b) because Defendant is subject to personal jurisdiction in this district, conducts business in this district, has committed acts of patent infringement in this district, and has induced and/or contributed to acts of patent infringement in this district. 8. By way of example, and without limitation, Defendant is registered to do business in the State of Texas and lists CT Corporation System, 1999 Bryan Street, Suite 900, Dallas, TX 75201 as its registered agent for service of process. 9. Further, by way of example, and without limitation, in June 2014, Defendant opened the first phase of its expanded Americas Operations Center in Austin, TX, within the -3- Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 4 of 33 PageID #: 570 subpoena power of the Eastern District of Texas. Apple already has a substantial presence in Austin. 10. As part of its new Economic Development Agreement with Austin, Apple will be investing roughly $300M to expand the America’s Operations Center in exchange for tax breaks and other benefits. 11. The company has announced its intention to hire 3600 new employees for its Austin Operations Center, which will double Defendant’s current Texas-based workforce and make its Texas facilities one of Apple’s largest bases of operations. (See Exhibit E at 1.) 12. Upon information and belief, Defendant conducts operation support activities related to the Accused Products and Services at its Texas facilities. 13. Further, by way of example, and without limitation, Defendant currently operates, and has operated since 2010, a microchip design center in Austin, TX. (Exhibit E at 1.) 14. By way of example, and without limitation, the Accused Products and Services are used, offered for sale and sold at numerous retail locations throughout this judicial district including, for example, at Best Buy stores in Longview, Tyler, and Texarkana. (See Exhibit F.) 15. Apple’s web site promotes its products and services as being available at Verizon Wireless in Marshall, as well as at Verizon Wireless, AT&T, and Target in Longview, and other locations in this judicial district. (See Exhibit G.) 16. Defendant has purposefully availed itself of the privilege of conducting business within the State of Texas, which activities, upon information and belief, infringe one or more claims of PMC’s patents in suit, causing injury in this judicial district. -4- Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 5 of 33 PageID #: 571 PATENTS-IN-SUIT 17. On May 29, 2012, United States Patent No. 8,191,091 (the ’091 Patent) was duly and legally issued for an invention entitled “Signal Processing Apparatus and Methods.” 18. On October 15, 2013, United States Patent No. 8,559,635 (the ’635 Patent) was duly and legally issued for an invention entitled “Signal Processing Apparatus and Methods.” 19. On July 6, 2010, United States Patent No. 7,752,649 (the ’649 Patent) was duly and legally issued for an invention entitled “Signal Processing Apparatus and Methods.” 20. On June 10, 2014, United States Patent No. 8,752,088 (the ’088 Patent) was duly and legally issued for an invention entitled “Signal Processing Apparatus and Methods.” 21. PMC owns all right, title, and interest in and to the ’091,’635, ’649, and ’088 patents (collectively, the “patents-in-suit”) and possesses all rights of recovery. FACTUAL BACKGROUND The Company 22. PMC is a family-run company that was founded by inventor John Harvey. PMC’s Chairman, along with his co-inventor James Cuddihy, made in the early 1980’s numerous inventions (collectively referred to hereinafter as “the Harvey Inventions”) which have been the basis for nearly 100 patents. 23. PMC is operated out of Sugar Land, Texas, and its intellectual property commercialization and licensing activities have created jobs, including the employment of a number of engineers and technical specialists, as well as management and counsel. 24. PMC owns a ground-breaking portfolio of intellectual property that covers, among other things, the use of control and information signals in electronic media content to process the content and generate output that is personalized and relevant to a user and the -5- Case 2:15-cv-01366-JRG-RSP Document 18 Filed 10/14/15 Page 6 of 33 PageID #: 572 application of novel content protection techniques to protect against piracy. PMC’s patents also disclose and claim apparatus and processes that allow for content to be transmitted by a content provider in a highly flexible manner where the content and control signals can be varied in their timing, location, and/or composition. 25. PMC attempted to commercialize the technology of the Harvey Inventions through internal development. For example, between 1989 and 1992 the company developed and publicly disclosed a prototype that demonstrated, using television as a model, many of the personalization concepts and access control concepts of PMC’s patented technology. 26. The company also sought to partner with established companies to realize the vision of the patents by jointly developing, marketing, and manufacturing commercial embodiments of the PMC technology. In the 1990’s, PMC and its predecessor, Personalized Mass Media Corporation, made multiple attempts to market the Harvey Inventions by contacting a number of large technology companies.