Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-03928/USCOURTS-cand-4_14-cv-03928-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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Case No. 5:14-cv-03928-PSG

ORDER DENYING DEFENDANT’S MOTION AND PLAINTIFF’S CROSS-MOTION FOR 

RULE 11 SANCTIONS 

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

ROTHSCHILD DIGITAL MEDIA 

INNOVATIONS, LLC, 

 Plaintiff,

 v. 

SONY COMPUTER ENTERTAINMENT 

AMERICA LLC, 

 Defendant. 

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Case No. 5:14-cv-03928-PSG

ORDER DENYING DEFENDANT’S 

MOTION AND PLAINTIFF’S CROSSMOTION FOR RULE 11 SANCTIONS 

(Re: Docket Nos. 43, 53) 

 Defendant Sony Computer Entertainment America LLC moves for Rule 11 sanctions 

against Plaintiff Rothschild Digital Media Innovations, LLC on the grounds that Rothschild’s 

complaint for infringement of United States Patent No. 6,101,534 is frivolous.1 Rothschild has in 

turn filed a cross-motion for sanctions against Sony and its counsel on the grounds that Sony’s 

sanctions motion is itself frivolous.

2

 Because the court does not find either pleading frivolous at 

this early stage of the case, both motions are DENIED. 

 

1 See Docket No. 43 at 1. 

2 See Docket No. 53 at 1-2. 

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Case No. 5:14-cv-03928-PSG

ORDER DENYING DEFENDANT’S MOTION AND PLAINTIFF’S CROSS-MOTION FOR 

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I. 

 When making a Fed. R. Civ. P. 11 determination in patent cases, courts apply the law of the 

regional circuit.3 In the Ninth Circuit, Rule 11(b) sanctions may be imposed when pleadings, 

papers and the like are presented for an improper purpose or include arguments that are

“frivolous.”4 A frivolous argument is one that is “legally or factually baseless” under an objective 

standard and made “without a reasonable and competent inquiry.”5 Under Rule 11(c), a district 

court may impose sanctions on a party, its attorneys or both.6 

The’534 patent, issued in 2000 and assigned to Rothschild, describes an online computer 

interface system.

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 Claim 1 of the ’534 Patent recites: 

 1. An interactive, remote, computer interface system comprising: 

a remote server assembly, said remote server assembly including a quantity of primary site 

data;

said remote server assembly including at least one primary site address, said primary site 

address including at least a portion of said primary site data and being distinct so as to 

identify a location thereof on a computer network; 

a local processor assembly;

 said local processor assembly being coupled in data transmitting and receiving 

communication with said remote server assembly;

at least one data storage assembly associated with said local processor assembly and 

structured to contain a quantity of auxiliary site data thereon, said auxiliary site data 

being associated with said primary site data;

said data storage assembly including a compact, portable and interchangeable computer 

readable medium;

 said compact, portable and interchangeable computer readable medium including a plurality 

of remotely accessible, auxiliary site addresses, encoded therein, each of said remotely 

accessible, auxiliary site addresses, including select portions of said quantity of auxiliary 

site data; and 

said remotely accessible, auxiliary site addresses being structured to be remotely accessed 

by said remote server assembly so as to initiate utilization of said select portions of said 

 

3 See Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1367 (Fed. Cir. 2012). 

4 See Intamin Ltd. v. Magnetar Techs., Corp., 483 F.3d 1328, 1338 (Fed. Cir. 2007) (citing 

Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990) (en banc)).

5 Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed. Cir. 2004) (citing Christian v. 

Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)). Because compliance with Rule 11 is analyzed 

under an objective standard, there is no need to show bad faith. See Kilopass Tech., Inc. v. 

Sidesense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013); Raylon, LLC, 700 F.3d at 1368. 

6 See Fed. R. Civ. P. 11(c). 

7 See Docket No. 43 at 3; Docket No. 1-3 at 5-6. 

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quantity of auxiliary site data by said local processor assembly in conjunction with said 

primary site data. 

 In an ex parte reexamination of the ’534 patent, the examiner focused on the following 

limitation: “said remotely accessible, auxiliary site addresses being structured to be remotely 

accessed by said remote server assembly so as to initiate utilization of said select portions of said 

quantity of auxiliary site data by said local processor assembly in conjunction with said primary 

site data.”8

 The examiner construed “remotely accessed by said remote server” to include both 

direct and indirect access to the auxiliary site addresses by the remote server assembly and 

determined that the claims were anticipated by four prior art references.9 Rothschild appealed to 

the Board of Patent Appeals and Interferences, arguing that a construction that includes indirect 

access “encompasses situations in which the remote server assembly is not remotely accessing the 

auxiliary site addresses” and that “‘to allow access’ [to auxiliary site data] is not the same as 

‘accessing.’”10 The BPAI agreed, adopting Rothschild’s narrower construction and finding the 

claims patentable over the prior art.

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 This suit followed. Sony now argues that because the ’534 claims were narrowed at 

Rothschild’s urging to include only direct access by the remote server, and Sony’s accused 

products only include indirect access through the local processor to the consoles, Rothschild’s 

complaint against Sony violates Rule 11.

12 Sony asks the court to dismiss the case with prejudice 

and award fees and costs. 

 

8 See Docket No. 1-3 at 5-6 (emphasis added). See also Docket No. 43 at 8. 

9 See Docket No. 43-2 at 5.

10 See id. at 5-6. 

11 See id. at 6.

12 See Docket No. 43 at 7-9. Sony sent Rothschild two letters and met and conferred with 

Rothschild in person to discuss Rothschild’s claim construction and allegations, only to receive a 

complaint from Rothschild two weeks later. See id. at 11. 

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II. 

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1338. The parties further 

consented to the jurisdiction of the undersigned magistrate judge under 28 U.S.C. § 636(c) and 

Fed. R. Civ. P. 72(a).13 

III. 

At issue is whether a party in a patent infringement case can move for Rule 11 sanctions to 

dispose of the case before a Markman hearing, and if so, whether Rothschild’s infringement claim

is so frivolous as to warrant terminating sanctions under Rule 11. While the court finds that Rule 

11 sanctions might be warranted at such an early stage in some cases, here they are not. 

First, the case law makes clear that Rule 11 sanctions may be imposed in a patent 

infringement case before a Markman hearing. Only a few months ago, the Eastern District of 

Texas did just that.14 But the reality is that most cases in which Rule 11 sanctions have been 

imposed proceeded past the claim construction or summary judgment stages.15 That Sony seeks 

such drastic sanctions at such an early stage therefore gives this court pause. 

Second, Rule 11 sanctions in patent cases generally involve either a frivolous claim 

construction16 or a frivolous infringement theory reflected by insufficient investigation.

17 Here, the 

issue is claim construction, and specifically, Rothschild’s necessary claim construction. Whenever 

 

13 See Docket Nos. 26, 28. 

14 See, e.g., Syneron Medical Ltd. v. Viora Ltd., Case No. 14-cv-00639, 2014 WL 7140643 (E.D. 

Tex. Dec. 12, 2014). 

15 See, e.g., Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1363 (Fed. Cir. 2012); 

Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1316-17 (Fed. Cir. 2011); Source Vagabond Sys.

LTD. v. Hydrapak, Inc., 753 F.3d 1291, 1297 (Fed. Cir. 2014). 

16 See, e.g., Syneron Medical, 2014 WL 7140643, at *3; Raylon, 700 F.3d at 1365; Eon-Net LP, 653 F.3d at 1317, 1319; Source Vagabond Sys. Ltd. v. Hydrapak, Inc., Case No. 11-cv-5379, 2012 

WL 1223928, at *1, *9 (S.D.N.Y. 2012). 

17 See, e.g., Smart Options, LLC v. Jump Rope, Inc., Case No. 12-cv-02498, 2013 WL 500861, at 

*4-9 (N.D. Ill. 2013); Judin v. United States, 110 F.3d 780, 783 (Fed. Cir. 1997). In the case of QPharma, the defendant argued that both the claim construction and infringement theory were 

frivolously brought and that plaintiff should thus be sanctioned. 360 F.3d at 1301. 

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it has addressed claim construction in the context of Rule 11, the Federal Circuit has looked to the 

intrinsic evidence supporting the construction at issue. For example, in Q-Pharma, the Federal 

Circuit held that the plaintiff’s claim interpretation “while broad, followed the standard canons of 

claim construction and was reasonably supported by the intrinsic record.”18 In that case, nothing in 

the description of the disputed patent limited the claim terms, and the defendant’s reliance on the 

plain meaning of the claim language thus was reasonable.19 In Raylon the court held that the 

plaintiff’s claim construction was unreasonable and conflicted with intrinsic evidence because the 

plaintiff relied on a single sentence in its specification to support its proposed interpretation when 

its patent claims explicitly supported other interpretations throughout.20 Syneron Medical might be 

the most analogous to the issue presented in this case.21 In Syneron Medical, the plaintiff’s 

proposed reading of the plain meaning of the disputed claim was supported by the intrinsic 

evidence of the patent, but only to a certain extent.22 The court nevertheless held that “while Viora 

may have a valid claim construction position, it is just that—a position taken during the early 

stages of litigation.”23 Taken together, the case law thus suggests that Rule 11 sanctions before a 

Markman hearing are only warranted when a proposed claim construction is “wholly unsupported” 

by intrinsic evidence.24 

Sony asserts that the claim language covers only the “situation where a remote server 

directly accesses the auxiliary site addresses in order to initiate utilization of the data stored 

 

18 Q-Pharma, 360 F.3d at 1301. 

19 Id. at 1300-01 (citing View Eng’g, Inc., v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed. Cir. 

2000); Judin v. United States, 110 F.3d 780, 784 (Fed. Cir. 1997)). 

20 Raylon, 700 F.3d at 1368-69. 

21 See Syneron Medical, 2014 WL 7140643, at *4. 

22 See id.

23 See id. (emphasis in original). 

24 See Raylon, 700 F.3d at 1368-69. 

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there.”25 Sony supports this proposition by pointing to a portion of the Order Confirming Validity

requiring that auxiliary site addresses be structured to be directly—rather than indirectly—accessed 

by the remote server: 

Since the language of claim 1 requires that the encoded auxiliary site addresses are 

structured to be accessed by the remote server, we find, according to that claim, that 

the addresses are directly accessed by the remote server. The scope of claim 1 does 

not cover encoded auxiliary site addresses that are structured to be accessed by a 

local processor or any other intermediary, ultimately resulting in the addresses 

being indirectly accessed by the remote server.26 

Sony thus interprets direct access to mean the absence of any intermediary steps—i.e. a process 

which starts at the remote server and goes straight to the auxiliary site addresses without passing go

or collecting $200. For Sony, the dispositive inquiry is about the path of the process. 

But Rothschild’s construction does not put any stock in this path. Rothschild asserts that 

“[d]irect access of auxiliary site data by the remote server includes the situation where the remote 

server is directing the local processor to access the auxiliary site data. Indeed, there is no other 

way the remote server could access the auxiliary data.”27 In other words, for Rothschild, the 

dispositive inquiry is about which device is directing the access regardless of path. 

To better understand the distinction, imagine that whatever device is directing the access is 

the “brain” of the operation. Under Rothschild’s construction, as long as the remote server is the 

brain, whether the path passes through no other devices or through one thousand other devices is 

irrelevant. It is on this basis that Rothschild successfully distinguished the Mages, Reisman, 

Uranaka and Fidelibus prior art references from the ’534 patent at the Board.

28 Taking Mages as 

an example, the remote server sends a key to the local processor, but no actions are ever directed 

by the remote server.29 It is only by initiation of the local processor—or perhaps a user operating 

 

25 See Docket No. 43 at 1. 

26 See Docket No. 53-2 at 9 (emphasis omitted).

27 Docket No. 53 at 12. 

28 See Docket No. 43-4 at 16-18. 

29 See id.

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the local processor—that the information reaches the auxiliary site addresses.30 In other words, the 

brain of the Mages operation is the local processor—not the remote server. Rothschild made 

similar arguments as to the other three prior art references before the Board.

31 None of its 

representations were based on the path from the remote server to its ultimate destination—the 

auxiliary site addresses. Rather, it focused on what device was running the show. 

Like Sony’s, Rothschild’s construction is supported by the OCV.

32 In particular, the Board 

explicitly referenced the importance of the remote server as the brain:

[B]roadly interpreting claim 1 to include auxiliary site addresses that are structured 

to be accessed by a local processor would not be consistent with Patentee’s 

Specification. The Specification discloses that “the remotely accessible, auxiliary 

site addresses are specifically encoded so as to restrict access by the local 

processor assembly [] unless the access is directed by the remote server assembly 

[].”33

From this, it is reasonable to conclude that access by the local processor is permitted, so long as the 

brain is in the remote server, substantiating Rothchild’s construction. 

In sum, while Sony has represented that its products include only access by the local 

processor, Rothschild has a reasonable claim that Sony nevertheless infringes the ’534 patent 

because access is directed by the remote server assembly. With such a wide yet reasonable divide 

in constructions between the parties—each drawing support from the OCV—the court cannot yet 

say that this case is frivolous. A Markman hearing and full claim construction is required.34

 

30 See id. 

31 See id.

32 See Docket No. 53-2 at 9 (emphasis omitted).

33 Id. at 10 (emphasis added); see id. at 4-5: 

1. Patent [’534] discloses that the “interchangeable computer readable medium [] is 

preferable structured such that only the remote server assembly [] can access the auxiliary 

site data at the auxiliary site addresses.” Col. 13, ll. 59-62. 

2. “[T]he remotely accessible, auxiliary site addresses are specifically encoded so as to 

restrict access by the local processor assembly [] unless the access is directed by the remote 

server assembly [].” Col. 14, ll. 34-37. 

34 Rothschild—in its opposition brief—moves for sanctions against Sony claiming that Sony’s 

sanctions motion is frivolous. But the mere fact that the court denies Sony’s motion does not mean 

that it must be frivolous. The cross-motion is DENIED.

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