1 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

FORD MOTOR COMPANY, 

 Plaintiff, Case No. 15-cv-10628 

 (consolidated with Case No. 15-11624) 

v. Hon. Matthew F. Leitman 

VERSATA SOFTWARE, INC. et al.

 Defendants. 

__________________________________________________________________/ 

ORDER (1) ADOPTING IN PART RECOMMENDED DISPOSITION OF 

SPECIAL MASTER’S REPORT AND RECOMMENDATION (#551); (2) 

SUSTAINING IN PART AND OVERRULING IN PART DEFENDANTS’ 

OBJECTIONS TO THE REPORT AND RECOMMENDATION (ECF #565); 

(3) GRANTING IN PART AND DENYING IN PART PLAINTIFF’S 

MOTION FOR SUMMARY JUDGMENT (ECF ## 354, 358); AND (4) 

GRANTING IN PART AND DENYING IN PART DEFENDANTS’ 

MOTION FOR SUMMARY JUDGMENT (ECF ## 379, 380) 

I 

In this action, Plaintiff Ford Motor Company seeks a declaratory judgment 

that it did not infringe and/or misappropriate certain patents, copyrights, and trade 

secrets belonging to Defendant software developers Versata Software, Inc., Versata 

Development Group, Inc., and Trilogy, Inc. (collectively, “Versata”). (See Sec. Am. 

Compl., ECF #226.) Versata has filed counterclaims related to the same patents, 

copyrights, and trade secrets. (See Sec. Am. Counterclaims, ECF #244.) The 

intellectual property at issue relates to computer software used in vehicle 

configuration. 
2 

On March 31, 2016, the Court, with the consent of the parties, entered an order 

appointing attorney Larry Graham as a special master to oversee the patent claim 

construction portion of this action. (See ECF #101.) The parties jointly selected Mr. 

Graham for this role. (See id. at Pg. ID 3093.) 

 Ford and Versata have filed cross-motions for summary judgment. (See Ford 

Mot., ECF ## 354, 358; Versata Mot., ECF ## 379, 380.) The motions raise, among 

other things, complex issues of patent law that tie directly to Mr. Graham’s previous 

ruling on claim construction. In a written order dated July 10, 2018, the Court 

referred the patent portions of the summary judgment motions to Mr. Graham for a 

report and recommendation.1

 (See ECF #509.) 

 Mr. Graham held a hearing on the patent portions of the summary judgment 

motions on September 13, 2018. (See 9/13/18 Hearing Tr., ECF #545.) On October 

16, 2018, he issued a report and recommendation (the “R&R”). (See R&R, ECF 

#551). The R&R reflects that Mr. Graham gave the issues presented very careful 

and thorough consideration. In the R&R, Mr. Graham recommended the following 

disposition with respect to the patent issues raised in the summary judgment 

motions: 

 

                                                            

1

 The Court ruled on the non-patent portions of the summary judgment motions in a 

separate written order dated September 7, 2018. (See ECF #534.) 
3 

Ford’s motion for summary judgment of invalidity of the 

asserted claims of U.S. Patent No. 7,200,582 and U.S. 

Patent No. 7,646,064 for violation of the onsale bar 

[should be] granted. 

The motions of Ford and Versata as to the infringement or 

noninfringement of the ‘582 and ‘064 patents, and also as 

to the novelty and obviousness of the asserted claims of 

these patents, [should be] denied. 

Ford’s motion for summary judgment of noninfringement 

of U.S. Patent No. 7,739,080 [should be] granted. 

Ford’s motion for summary judgment of noninfringement 

of U.S. Patent No. 6,405,308 and U.S. Patent No. 

6,675,294 [should be] denied. 

Ford’s motion that the asserted claims of U.S. Patent No. 

7,882,057 are invalid as being directed to patent-ineligible 

subject matter under Section 101 [should be] granted. 

Versata’s cross-motion for patent eligibility of the ‘057 

patent [should be] denied. 

Versata’s motion that the asserted claims of U.S. Patent 

No. 7,739,080 are not invalid under Sections 102 and 103 

[should be] granted. Ford’s declaratory judgment claims 

asserting invalidity of U.S. Patent No. 5,825,651 and U.S. 

Patent No. 8,805,825 [should be] dismissed for lack of 

subject matter jurisdiction. Versata’s motion that the 

dismissed or non-asserted claims of the ‘308, ‘294, ‘582, 

‘064, ‘057, and ‘080 patents are not invalid under Sections 

102 and 103 [should be] denied. 

Versata’s motion that its asserted patents are valid under 

Section 101 as being directed to patentable subject matter 

is withdrawn except as applied to the ‘057 patent, referred 

to above. 
4 

Versata’s motion that the asserted claims of the ‘057 

patent are valid under Sections 102 and 103 in view of the 

prior art is withdrawn. 

(R&R, ECF #551 at Pg. ID 42249-50.) 

Versata filed timely objections to the R&R on November 28, 2018.2

 (See 

Objections, ECF #565.) Versata raises objections to three of Mr. Graham’s 

recommendations: 

Versata objects to the Special Master’s recommendation 

that the Court grant summary judgment that (1) the ‘582 

and ‘064 patents are invalid under the ‘on-sale’ bar of 35 

U.S.C. § 102(b); (2) the asserted claims of the ‘080 patent 

are not infringed; and (3) that the asserted claims of the 

‘057 patent are invalid under 35 U.S.C. § 101. 

(Id. at Pg. ID 42360.) 

 The Court held a hearing on Versata’s objections on February 26, 2019. (See 

2/26/19 Hearing Transcript, ECF #623.) For the reasons that follow, the Court 

SUSTAINS Versata’s objections with respect to the ‘582, ‘064, and ‘080 patents 

and OVERRULES Versata’s objections with respect to the ‘057 patent. 

II 

 Federal Rule of Civil Procedure 53(f) governs a court’s review of a special 

master’s report and recommendation. Under that rule, a district court must conduct 

a de novo review of the portions of a special master’s report and recommendation to 

                                                            

2

 Ford did not file any objections to the R&R. 
5 

which a party objects. See Fed.R.Civ.P 53(f)(3) and (4). See also Hockstein v. 

Microsoft Corp., 730 F.Supp.2d 714, 717 (E.D. Mich. 2010) (“The Court reviews de 

novo factual findings and legal conclusions of the Special Master to which a specific 

objection has been made. See Fed.R.Civ.P. 53(f)”), aff’d 430 F. App’x 898 (Fed. Cir. 

2011). Upon review of the report and recommendation, a court “may adopt or 

affirm, modify, wholly or partly reject or reverse, or resubmit to the master with 

instructions.” Fed.R.Civ.P 53(f)(1). 

 To the extent that the parties have not filed specific objections to the 

recommended dispositions that Mr. Graham proposed in the R&R, the Court 

ADOPTS those recommendations. 

III 

As described above, Versata has raised three specific objections to the R&R. 

The Court will review each in turn. 

A 

Versata first objects to Mr. Graham’s recommendation that Ford is entitled to 

summary judgment with respect to the asserted claims of the ‘582 and ‘064 patents 

on the basis that the patents are invalid under the “on-sale” bar. (See Objections, 

ECF #565 at Pg. ID 42360-75.) While the Court appreciates and respects Mr. 

Graham’s thoughtful analysis of the on-sale bar issues, the Court SUSTAINS this 
6 

objection and DENIES Ford’s motion for summary judgment based upon the onsale bar. 

1 

“A person shall be entitled to a patent unless ... the invention was ... on sale 

in this country, more than one year prior to the date of the application for patent in 

the United States.” Barry v. Medtronic, Inc., 914 F.3d 1310, 1331 (Fed. Cir. 2019) 

(quoting 35 U.S.C. § 102(b) (2002)). This rule is commonly referred to as the “onsale bar.” Id. The on-sale bar “encourages prompt disclosure of new inventions and 

in particular limits commercial exploitation of an invention prior to filing for a patent 

application.” August Technology Corp. v. Camtek, Ltd., 655 F.3d 1278, 1288 (Fed. 

Cir. 2011). 

 Under the Supreme Court’s decision in Pfaff v. Wells Electronics, Inc., 525 

U.S. 55 (1998), courts apply a two-part test when determining whether a patent is 

invalid under the on-sale bar. “The on-sale bar applies” where, one year before what 

is known as the critical date, (1) “the product [is] the subject of a commercial offer 

for sale” and (2) “the invention [is] ready for patenting” Id. at 67. The “critical date” 

is “[t]he date exactly one year prior to the date of application for the patent.” 

Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1327 (Fed. Cir. 2001). 

Under the “commercial offer for sale” prong of the Pfaff test, “[o]nly an offer 

which rises to the level of a commercial offer for sale, one which the other party 
7 

could make into a binding contract by simple acceptance (assuming consideration), 

constitutes an offer for sale under § 102(b).” Id. at 1328. “To determine if the offer 

is sufficiently definite, one must examine the language of a proposal in accordance 

with the principles of general contract law.” Id. “The offer or contract for sale must 

unambiguously place the invention on sale, as defined by the patent’s claims.” 

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 855 F.3d 1356, 1366 

(Fed. Cir. 2017) (emphasis in original). 

The “ready for patenting” requirement in the second-prong of the Pfaff test 

“may be satisfied in at least two ways: by proof of reduction to practice before the 

critical date; or by proof that prior to the critical date the inventor had prepared 

drawings or other descriptions of the invention that were sufficiently specific to 

enable a person skilled in the art to practice the invention.” Pfaff, 525 U.S. at 67-68. 

“Under the test for a reduction to practice, [a party challenging a patent] must show 

that the inventor (1) constructed an embodiment or performed a process that met all 

the limitations and (2) determined that the invention would work for its intended 

purpose.” Barry, 914 F.3d at 1322. See also Robotic Vision Sytstems, Inc. v. View 

Engineering, Inc., 112 F.3d 1163, 1167 (Fed. Cir. 1997) (noting that “application of 

the on-sale bar requires consideration of whether ‘the invention was in fact complete 

and was known to work for its intended purpose’”) (quoting Seal-Flex, Inc. v. 

Athletic Track and Court Constr., 98 F.3d 1318, 1322 (Fed. Cir. 1996)). “An 
8 

invention is said to work for its intended purpose when there is a demonstration of 

its workability or utility.” Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 

1361, 1367 (Fed. Cir. 2008). 

 An alleged infringer challenging the validity of a patent must prove invalidity 

by “clear and convincing evidence.” Microsoft Corp. v. I4I Ltd. Partnership, 564 

U.S. 91, 97 (2011). See also Eli Lilly and Co. v. Barr Laboratories, Inc., 251 F.3d 

955, 962 (Fed. Cir. 2011) (The “moving party seeking to invalidate a patent at 

summary judgment must submit such clear and convincing evidence of invalidity so 

that no reasonable jury could find otherwise”). Therefore, it is the alleged infringer’s 

burden to “prove the facts underlying both prongs of the Pfaff test by clear and 

convincing evidence.” Allen Engineering Corp. v. Bartell Industries, Inc., 299 F.3d 

1336, 1352 (Fed. Cir. 2002). At the hearing on Versata’s objections to the R&R, 

Ford acknowledged that in order to establish its entitlement to summary judgment 

on its on-sale bar defense, it would have “to establish that every reasonable juror 

would find by clear and convincing evidence that both prongs of the on-sale bar test 

are satisfied.” (2/26/2019 Hearing Tr., ECF #623 at Pg. ID 48038-39.) 

2 

In January 2002, Ford and Versata executed a software subscription 

agreement known as the SSA under which Versata agreed to “license[] a version of 

[its ACM automotive-configuration software] to Ford.” (R&R, ECF #551 at Pg. ID 
9 

42170.) That version, “ACM 3.2,” was not yet complete when the parties executed 

the SSA. (Id.) As part of the development of ACM 3.2, Versata employee Shawn 

Smith conceived, developed, and internally tested a consistency-checking function 

for potential inclusion in the software. (See Smith Decl. at ¶¶ 5-6, ECF #434-4 at Pg. 

ID 31825-26.) Smith conducted this work in February and March 2002. (See id.) 

After Smith completed his testing, Versata added the consistency checker to its 

working version of ACM 3.2. (See id. at ¶8, ECF #434-4 at Pg. ID 31826.) On 

March 29, 2002, Doug Fearing of Versata sent that version of ACM 3.2 to Ford for 

“Integration and Testing.” (ECF #431-8 at Pg. ID 30855.) One month later, on April 

29, 2002, Versata delivered a final, “production” version of ACM 3.2 to Ford. (Smith 

Decl. at ¶9, ECF #434-4 at Pg. ID 31825.) This final version also included the 

consistency-checking invention. 

3 

The consistency-checking invention became the subject of the ‘582 and ‘064 

patents. Versata filed its application for the ‘582 patent on March 31, 2003. (See 

R&R, ECF #551 at Pg. ID 42176.) “The ‘064 patent is a divisional of the ‘582 

patent, and [it] has the same effective filing date.” (Id.) Accordingly, the “critical 

date” for purposes of the on-sale bar is March 31, 2002. 
10 

4 

In the R&R, the Special Master first concluded that Ford had proved by clear 

and convincing evidence that the consistency-checking invention claimed in the ‘582 

and ‘064 patents was the subject of a commercial offer for sale before the critical 

date. (See id. at Pg. ID 42188-95.) The Special Master initially found that “the 

parties understood” that the version of ACM 3.2 that Versata would deliver under 

the SSA would include “a consistency checker.” (Id. at Pg. ID 42179.) He then 

concluded that, prior to the critical date, Versata had “objectively decided to include 

[the consistency-checking invention claimed in the ‘582 and ‘064 patents] in the 

final version” of ACM 3.2 that it would deliver under the SSA. (Id. at 42195.) Based 

in large part upon that finding, the Special Master determined that the invention was 

the subject of a commercial offer for sale before the critical date. (See id.) 

 Next, the Special Master determined that the consistency-checking invention 

was “ready for patenting” before the critical date. (Id. at Pg. ID 42195-201.) He 

rested that finding on his conclusion that the consistency-checking invention “was 

reduced to practice before the delivery [of ACM 3.2 for test and integration] on 

March 29, 2002.” (Id. at Pg. ID 42201.) 

 The Special Master found that the consistency-checking invention was on sale 

and ready for patenting even though Versata planned to test ACM 3.2 – which 

contained the invention – in Ford’s environment before delivering the final version 
11 

of the software to Ford. (See id. at 42198-200.) The testing to be done at Ford did 

not “affect his conclusion” with respect to the on-sale bar because, as he viewed the 

evidence, (1) Versata had already completed its own internal testing before the 

testing to be done at Ford and (2) based upon that testing, Versata had satisfied itself 

that the invention worked for its intended purpose and would be sold to Ford. (Id. at 

42198-99.) 

5 

The Court respectfully disagrees with the Special Master’s view that every 

reasonable juror would necessarily find, by clear and convincing evidence, that the 

consistency-checking invention was offered for sale and ready for patenting before 

the critical date. 

 First, there is evidence in the record that raises at least some doubt as to 

whether the consistency-checking invention was offered for sale before the critical 

date. The evidence in question suggests that Versata would not have offered (and 

did not offer) the consistency-checking invention for sale unless and until (1) Versata 

had a sufficient opportunity to test that invention on site at Ford and (2) both Ford 

and Versata were satisfied with the results of that on-site testing at Ford.3

 This 

                                                            

3

 It is undisputed that the testing period for ACM 3.2 would not have been completed 

until after the critical date of March 31, 2002. Versata did not deliver the test 

candidate of ACM 3.2 to Ford until March 29, 2002, and it did not conclude the 

testing period and deliver the production version of the software until April 29, 2002. 
12 

evidence includes the sworn declaration of Dr. Keyanoush Efatpenah, a former 

Senior Manager at Versata who has “personal knowledge of [Versata’s] practices 

regarding development and delivery of software to Ford.” (Efatpenah Decl. at ¶5, 

ECF #431-9 at Pg. ID 30857.) Dr. Efatpenah said that the version of ACM 3.2 that 

Versata delivered on March 29, 2002 – a version that included the claimed 

consistency-checking invention – was a “test candidate.” (Id. at ¶12, Pg. ID 30859.) 

He added that the “inten[tion]” of the delivery of the test candidate was “to permit 

the Ford IT group and [Versata] to test the software in the Ford IT group’s simulated 

environment to determine if it had any technical issues that needed to be addressed 

before it would have been released into production.” (Id. at ¶¶ 12, 14, Pg. ID 30859; 

emphasis added.) 

According to Dr. Efatpenah, Versata was “actively involved in the Ford test 

implementation,” and Versata, among other things, could “monitor and solicit 

feedback about whether Ford’s internal testing encountered performance and/or 

functionality issues resulting from the newly added functionality” in the software. 

(Id. at ¶11, Pg. ID 30857.) Dr. Efatpenah also said that Versata “would recommend 

the [final, production version of ACM 3.2] be released to Ford’s production servers” 

only if both Ford and Versata did not “detect[]” any issues with the test candidate of 

the software “and it was determined that the ACM [test candidate] did perform its 

intended purpose....” (Id. at ¶13, Pg. ID 30859.) If, on the other hand, “[Versata] or 
13 

Ford determined that the [test candidate] was not working as expected, [Versata] 

would correct any identified issues if necessary. In the meantime, Ford would 

continue to use the prior version of ACM until these issues were resolved.” (Id.) 

 Dr. Efatpenah’s declaration is at least some evidence that could persuade a 

reasonable juror to find a lack of clear and convincing that the claimed consistencychecking invention was the subject of a commercial offer for sale before the critical 

date. Dr. Efatpenah’s sworn statements evidence Versata’s intent to be actively 

involved in the on-site testing at Ford and to use the results of that testing to 

determine which specific inventions would be included in the final, production 

version of ACM 3.2 that Versata was offering for sale. (See generally Efatpenah 

Decl. at ¶¶ 4-14, ECF #431-9 at Pg. ID 30857-59; see also Smith Decl. at ¶¶ 8-10, 

ECF #434-4 at Pg. ID 31826.) If a juror accepted Dr. Efatpenah’s version of events, 

the juror could reasonably find that there is not clear and convincing evidence that, 

prior to the critical date, Versata offered for sale the version of ACM 3.2 that 

included the consistency-checker invention. The Court therefore concludes that 

Ford is not entitled to summary judgment on its on-sale bar defense. 

 Ford counters that under the Federal Circuit’s decision in Atlanta Attachment, 

supra, the consistency-checker invention was offered for sale prior to the critical 

date even though Versata intended to test the invention further after that date. (See 

Ford Supp. Br., ECF #625 at Pg. ID 48167-70). However, contrary to Ford’s 
14 

argument, Atlanta Attachment does not stand for the proposition that Versata’s intent 

to test ACM 3.2 (the software that included the consistency-checking invention) is 

irrelevant to whether the invention was offered for sale. In Atlanta Attachment, the 

Federal Circuit held that an invention was offered for sale even though it would be 

tested after delivery. But the testing in that case was different from the testing here. 

The testing in Atlanta Attachment was to be done by the purchaser, not by the 

inventor and its agents, and that was an important reason that the Federal Circuit 

found the testing “immaterial” to whether the invention was offered for sale. Atlanta 

Attachment, 516 F.3d at 1366. Here, in contrast, there is evidence in the record from 

which a jury could reasonably conclude that, as Dr. Efatpenah stated in his 

declaration, Versata planned (1) to be actively involved in the testing along with 

Ford and (2) to consider the results of the testing when deciding which version of 

the software to finally sell to Ford.4

 Atlanta Attachment does not hold that testing 

under these circumstances is immaterial to whether an invention is offered for sale 

Moreover, the circumstances in Atlanta Attachment are materially different 

from the circumstances that existed between Ford and Versata with respect to the 

testing of the ACM 3.2. In Atlanta Attachment, Atlanta Attachment developed an 

                                                            

4

 Ford has further contended that testing by anyone other than the inventor himself 

is irrelevant to the question of whether the on-sale bar applies. But Ford has not 

cited any authority for that proposition. And in Atlanta Attachment, the Federal 

Circuit noted that testing could be completed by an inventor or “his agents.” Atlanta 

Attachment, 516 F.3d at 1366 (emphasis added). 
15 

invention “in response to a request from Sealy, Inc. to create an automatic gusset 

ruffler machine.” Id. at 1363. “Atlanta Attachment developed a total of four 

prototypes which they presented for sale to Sealy along with offers to sell production 

models” of the prototypes. Id. Atlanta Attachment invoiced Sealy for each 

prototype, Sealy paid for each protype, and Sealy tested and/or inspected each 

prototype and provided feedback about them to Atlanta Attachment. See id. 

“Ultimately, Sealy decided not to purchase [production model] machines from 

Atlanta Attachment.” Id. at Pg. ID 1364. 

The Federal Circuit held that under those circumstances, the prototype at issue 

– which included the claimed invention – was the subject of a commercial offer for 

sale for at least two reasons – because (1) “Atlanta Attachment sent Sealy an invoice 

for the machine (an offer), and Sealy paid for the machine (an acceptance)” and (2) 

Atlanta Attachment had presented a commercial offer for sale of the invention en 

masse.” Id. at 1365. Here, Ford has not presented clear and convincing evidence 

that Versata ever invoiced Ford for the test candidate of ACM 3.2 and/or that Ford 

ever paid for that test candidate. And there is evidence that Ford was purchasing the 

final, production version of the ACM 3.2. Likewise, this case does not involve a 

commercial offer for an “en masse” sale of the invention. For all of these reasons, 

Atlanta Attachment does not control here. 
16 

 Second, Ford has not persuaded the Court that every reasonable juror would 

necessarily find by clear and convincing evidence that the consistency-checking 

invention was ready for patenting before the critical date. As explained above, an 

invention is “ready for patenting” when the inventor “determine[s] that the invention 

would work for its intended purpose.” Barry, 914 F.3d at 1322. “Testing is required 

to demonstrate reduction to practice in some instances because without such testing 

there cannot be sufficient certainty that the invention will work for its intended 

purpose.” Z4 Technologies, Inc. v. Microsoft Inc., 507 F.3d 1340, 1352 (Fed. Cir. 

2007). “[T]he necessity and sufficiency of such testing are factual issues.” Id. See 

also Streck, Inc. v. Research & Diagnostic Systems, Inc., 659 F.3d 1186, 1195 (Fed. 

Cir. 2011) (“The sufficiency of testing to show an invention works for its intended 

purpose is a factual issue”). 

Here, Versata has identified evidence that raises at least some question as to 

whether, prior to the critical date, Versata believed that the consistency-checking 

invention would work for its intended purpose. For example, Dr. Efatpenah said in 

his sworn declaration that at the time Versata delivered the “test candidate” version 

of the ACM 3.2 software to Ford, “it was not clear if the [software] ... would work 

for its intended purpose.” (Efatpenah Decl. at ¶12, ECF #431-9 at Pg. ID 30859.) 

Thus, “[f]urther testing [of the software] in a Ford environment was necessary to 

determine if [the software] would perform its intended purpose and was ready for a 
17 

production release.”5 (Id. at ¶10, Pg. ID 30858.) Moreover, Shawn Smith, the 

Versata employee who conceived and developed the consistency-checking 

invention, said in a sworn declaration that he “could not be certain that [his] 

consistency checking invention would work until it was tested in Ford’s 

environment.” (Smith Decl. at ¶5, ECF #634-1 at Pg. ID 48689.6

) Given this 

                                                            

5

 While Dr. Efatpenah referred in his declaration to testing the software generally, 

and not to testing any particular features of the software, a jury could reasonably 

conclude that the testing referred to by Dr. Efatpenah would include testing of the 

specific inventions included within the software, including the consistency-checker 

invention at issue here. 

6

 Versata filed Smith’s declaration as an exhibit to its most-recent supplemental brief 

rather than as an exhibit to its original summary judgment response, but the Court 

will nonetheless exercise its discretion to consider the declaration. The Court also 

recognizes that there is some arguable tension between the statement in Smith’s 

declaration that he “could not be certain” that his consistency-checking invention 

“would work until it was tested in Ford’s environment” (Smith Decl. at ¶5, ECF 

#634-1 at Pg. ID 48689) and his testimony at his deposition that he tested the 

invention and concluded that it led to a “really big improvement in performance.” 

(Smith Dep., ECF #523-3 at Pg. ID 40671-72.) But while these statements may 

perhaps be in some tension with one another, the Court does not believe that they 

directly contradict one another. An invention could achieve a “big improvement in 

performance” yet still not work as intended. Because Smith’s declaration does not 

directly contradict his deposition testimony, the Court may consider the declaration 

on summary judgment. See, e.g., France v. Lucas, 836 F.3d 612, 622 (6th Cir. 2016) 

(explaining that the sham-affidavit rule bars court from considering affidavit on 

summary judgment only where the affidavit “directly contradicts prior sworn 

testimony”). Furthermore, Smith’s declaration may be in some tension with an email 

he sent on February 11, 2002, in which he wrote that the consistency-checking 

invention “seems to work extremely well,” “all tests pass,” and “production run 

comparisons look very promising.” (2/11/02 email, ECF #523-4 at Pg. ID 40674.) 

That arguable tension does not prohibit the Court from considering the declaration 

on summary judgment and may be explored on cross-examination. Finally, even 

without Smith’s declaration, the Court would still deny summary judgment on Ford’ 
18 

evidence, a reasonable juror could conclude that there is not clear and convincing 

evidence that the claimed invention was ready for patenting before the critical date. 

 The Court readily acknowledges that Ford has presented its own evidence – 

evidence that a jury may well find persuasive – that the claimed consistencychecking invention was the subject of a commercial offer for sale and was ready for 

patenting before the critical date. But the Court respectfully disagrees with the 

Special Master and Ford that this evidence is so compelling that every reasonable 

juror would have to find by clear and convincing evidence that Versata had decided 

to include the invention “in the final version [of the software] prior to the critical 

date.” (R&R, ECF #551 at Pg. ID 42195; emphasis added.) Accordingly, the Court 

SUSTAINS Versata’s objections and DENIES Ford’s motion for summary 

judgment of invalidity of the asserted claims of the ‘582 and ‘064 patents for 

violating the on-sale bar. 

B 

 Versata next objects to Mr. Graham’s recommendation that Ford is entitled to 

summary judgment with respect to the ‘080 patent on the basis that Ford did not 

infringe that patent. (See Objections, ECF #565 at Pg. ID 42375-83.) The Court 

                                                            

on-sale bar defense for all of the other reasons explained above and based upon the 

other evidence discussed above. 
19 

SUSTAINS this objection and DENIES Ford’s motion for summary judgment of 

non-infringement of the ‘080 patent. 

1 

“Determining infringement is a two-step process. First, the court determines 

the scope and meaning of the asserted claim. Then, the court compares the properly 

construed claims with the accused device or product to reach a finding regarding 

infringement.” AFG Industries, Inc. v. Cardinal IG Co., Inc., 375 F.3d 1367, 1372 

(Fed Cir. 2004). “In the context of summary judgment, this court reviews the second 

determination for genuine disputes of material facts that would preclude a grant of 

summary judgment. In particular, a trial court cannot reach a conclusive finding of 

noninfringement if the record shows some evidence supporting a finding of 

noninfringement and some evidence to the contrary.” Id. (internal citation omitted; 

emphasis added.) See also Wi-LAN USA v. Ericcson, Inc., 675 F. App’x 984, 995 

(Fed. Cir. 2017) (reversing summary judgment and holding that “[t]he District Court 

erred in entering summary judgment because it ignored conflicting evidence in the 

record”). 

2 

“The ‘080 patent relates to combining multiple product definition models 

together ... An objective of the patent is to combine the multiple models in a way 

that detects and automatically resolves [] conflicts” that may result when the models 
20 

are combined. (R&R, ECF #551 at Pg. ID 42208-09.) Ford moved for summary 

judgment on the basis that its automotive configuration software does not infringe 

the ‘080 patent. “Ford acknowledge[d] that its [] software includes the ability to 

combine models and resolve conflicts in them, but [Ford] contend[ed] that it does so 

in a different manner than that taught and claimed by the ‘080 patent.” (Id. at Pg. ID 

42209.) 

The Special Master recommended that the Court grant Ford summary 

judgment with respect to its claim of non-infringement of the ‘080 patent because 

“Versata ha[d] not demonstrated the existence of a genuine issue of material fact in 

support of its assertion of infringement of [that] patent.” (Id. at Pg. ID 42218.) More 

specifically, the Special Master found that Versata’s claim that Ford’s software 

infringed the ‘080 patent was “unsupported by anything beyond the conclusory 

statement of Versata’s expert Dr. Malek.” (Id. at Pg. ID 42214.) The Special Master 

reviewed the portions of Dr. Malek’s opinion that Versata relied upon and concluded 

that “Dr. Malek’s opinion [was] entirely conclusory, asserting [infringement of the 

‘080 patent] but without citing to underlying facts in support.” (Id. at Pg. ID 42215.) 

The Special Master also faulted Dr. Malek for not providing “any meaningful 

explanation” for his analysis and for not citing “documents or source code” that 

supported his conclusions. (Id.) Finally, the Special Master found that Dr. Malek’s 
21 

“assertions [were] inconsistent” with a Superconfiguator Generator document that 

explained how Ford’s software worked. (Id. at Pg. ID 42216.) 

3 

Versata objects to this recommendation of the Special Master on the basis 

that, among other things, the Special Master wrongly rejected the opinion of its 

expert Dr. Malek and thereafter “impermissibly resolved genuine disputes of 

material facts against Versata.” (Objections, ECF #565 at Pg. ID 42383.) The Court 

appreciates the Special Master’s careful analysis of the infringement issues, but it 

agrees with Versata. The Court has reviewed the record and concludes that summary 

judgment is not appropriate on this claim. 

The Court respectfully disagrees with the Special Master that Dr. Malek’s 

opinions with respect to the ‘080 patent are so conclusory and so contrary to the 

other evidence in the record that there is not a genuine issue of material fact for trial. 

In Dr. Malek’s expert report and his reply report, he opined that Ford’s replacement 

automotive-configuration software infringed Versata’s ‘080 patent. (See ECF #429 

at Pg. ID 29040-42.) The relevant portions of Dr. Malek’s reports included citations 

to numerous lines of source code from Ford’s own software which Dr. Malek 

indicated supported his analysis. For example, in paragraphs 435-437 of Dr. 

Malek’s expert report, Dr. Malek explained how Ford’s replacement software 

identifies and avoids conflicts in a manner that infringes the ‘080 patent. (See ECF 
22 

#366-9 at ¶¶ 435-37, Pg. ID 20366.) Those paragraphs include citations to 15 

separate portions of the source code of Ford’s software that support Dr. Malek’s 

analysis.7

 (See id.) 

The Court concludes that a jury could give at least some weight to Dr. Malek’s 

opinions that Ford has infringed the ‘080 patent. Thus, this is a case in which “the 

record shows some evidence supporting a finding of noninfringement and some 

evidence to the contrary.” AFG Industries, 375 F.3d at 1372. Under these 

circumstances, summary judgment is inappropriate. See id. The Court therefore 

SUSTAINS Versata’s objections and DENIES Ford summary judgment on its claim 

of non-infringement of the ‘080 patent. 

C 

 Finally, Versata objects to Mr. Graham’s recommendation that Ford is entitled 

to summary judgment with respect to the asserted claims of the ‘057 patent on the 

basis that the claims are invalid under Alice v. Corp. v. CLS Bank Int’l, 134 S.Ct. 

2347, 2355 (2014). (See Objections, ECF #565 at Pg. ID 42384-94.) The Court 

OVERRULES this objection and GRANTS Ford’s motion that the asserted claims 

of the ‘057 patent are invalid. 

                                                            

7

 This Court is satisfied that Versata sufficiently identified and cited to these 

paragraphs of Dr. Malek’s report in its summary judgment motion papers. 
23 

1 

Section 101 of the Patent Act provides that “[w]hoever invents or discovers 

any new and useful process, machine, manufacture, or composition of matter, or any 

new and useful improvement thereof, may obtain a patent therefor.” 35 U.S.C. § 101. 

In Alice, “the Supreme Court articulated a two-step test for examining patent 

eligibility under § 101.” Data Engine Technologies, LLC v. Google, LLC, 906 F.3d 

999, 1007 (Fed. Cir. 2018). In the first step, courts “determine whether the claims 

at issue are directed to a patent-ineligible concept.” Id. (quoting Alice, 134 S.Ct. at 

2355. For example, “[l]aws of nature, natural phenomena, and abstract ideas are not 

patentable.” Id. (quoting Alice, 134 S.Ct. at 2355.) “The abstract ideas category 

embodies the longstanding rule that an idea of itself is not patentable.” Alice, 134 

S.Ct. at 2355. “If claims are directed to a patent-ineligible concept,” courts move to 

step-two of the Alice test. Data Engine Technologies, 906 F.3d at 999. “In [that] 

step, [courts] consider ‘the elements of each claim both individually and as an 

ordered combination to determine whether the additional elements transform the 

nature of the claim into a patent-eligible application.” Id. (quoting Alice, 134 S.Ct. 

at 2355) (internal quotation marks omitted). “This second step is ‘a search for an 

inventive concept – i.e., an element or combination of elements that it sufficient to 

ensure that the patent in practice amounts to significantly more than a patent upon 
24 

the ineligible concept itself.” Id. (quoting Alice, 134 S.Ct. at 2355) (internal 

punctuation marks omitted). 

 With respect to computers and computer software, courts must ask at step one 

of the Alice inquiry whether “the focus of the claims is on the specific asserted 

improvement in computer capabilities ... or, instead, on a process that qualifies as 

an abstract idea for which computers are invoked merely as a tool.” Enfish, LLC v. 

Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016). In other words, the question 

is whether the asserted claims solve a problem with computer functionality (and thus 

the claims are not directed at an abstract idea) or whether the asserted claims use 

computers to solve a problem (and thus the claims are directed at an abstract idea). 

See id. At step two of the Alice analysis, “the ‘mere recitation of a generic computer 

cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” 

Data Engine Technologies, 906 F.3d at 1012 (quoting Alice, 134 S.Ct. at 2358). “For 

the role of a computer in a computer-implemented invention to be deemed 

meaningful in the context of this analysis, it must involve more than performance of 

well-understood, routine, and conventional activities previously known to the 

industry.” Id. (internal punctuation omitted). “Thus, if a patent’s recitation of a 

computer amounts to a mere instruction to implement an abstract idea on a computer, 

that addition cannot impart patent eligibility.” Alice, 134 S.Ct. at 2358 (internal 

punctuation and citation omitted). See also Versata Development Group, Inc. v. SAP 
25 

America, Inc., 793 F.3d 1306, 1335 (Fed. Cir. 2015) (“Examination of the claims – 

as a whole and in terms of each claim’s limitations – reveals that the claims are not 

directed to improving computer performance and do not recite any such benefit. The 

claims are directed to price determination and merely use a computer to improve the 

performance of that determination – not the performance of a computer”). 

2 

 The claims of the ‘057 patent at issue here are claims 1, 18, 19, 21, 22, 23, 25, 

and 27. (R&R, ECF #551 at Pg. ID 42231.) The primary claim, claim 1, provides 

that: 

A method for using a computer system, Wherein the 

computer system includes computer assisted configuration 

technology to respond to one or more configuration 

queries using configuration sub-models, the method 

comprising: receiving one or configuration queries 

representing one or more questions involving parts and 

part relationships in a configuration of a configurable 

product; and performing With the computer system: 

dividing one or more configuration queries into multiple 

configuration sub-queries, Wherein the multiple 

configuration sub-queries represent the one or more 

configuration; processing each sub-query using at least 

one configuration sub-model per sub-query, Wherein each 

configuration sub-model collectively models the 

configurable product and each configuration sub-model 

includes data to define compatibility relationships 

between parts included in the configuration sub model and 

each configuration sub-model (i) represents a portion of a 

configuration model of the configuration product and (ii) 

allows answers from each configuration sub-model to be 

combined to provide a consolidated answer to the one or 

more configuration queries; generating a response to the 
26 

one or more configuration queries based upon the 

processing of each sub-query using at least one 

configuration sub-model per sub query; and providing the 

response to the one or more configuration queries as data 

for display by a display device. 

(ECF #462-4 at Pg. ID 38388.) 

 The Special Master found that the patented invention “seeks to reduce 

processing requirements by breaking configuration problems into a set of smaller 

problems, solving them individually, [and] then combining the results.” (R&R, ECF 

#551 at Pg. ID 42233.) He then concluded that the asserted claims were invalid 

because they were directed at non-patentable subject matter under the Alice test. 

At step one of the Alice inquiry, the Special Master found that the asserted 

claims were not directed at an improvement in computer functionality. Instead, he 

concluded that they were “directed to the abstract idea of dividing a large problem 

into a number of smaller problems in order to solve the smaller ones separately and 

then combine the results to solve the larger problem.” (Id. at Pg. ID 42234.) He 

further rejected Versata’s arguments that “the claims [were] directed to 

improvements in computer technology” as “superficial.” (Id. at Pg. ID 42237.) He 

determined that while “[d]ividing larger problems into smaller ones undoubtedly 

will improve the ability to solve configuration problems using a computer ... this 

advantage is not truly directed to the computer.” (Id. at Pg. ID 42238.) He therefore 

concluded that “the asserted claims are directed at an abstract idea” because “the 
27 

claims use the computer ‘merely as a tool,’ requiring a computer to be used to solve 

a problem.” (Id. at 42239-40.) 

At step two of the Alice analysis, the Special Master found that “[t]he claim 

limitations do not supply an inventive concept that renders any of them ‘significantly 

more’ than an abstract idea to which the claims are directed.” (Id. at Pg. ID 42243.) 

He therefore concluded that the claims “are not patent-eligible as a matter of law.” 

(Id.) 

3 

The Court agrees with the Special Master that at step one of the Alice inquiry, 

the asserted claims are not “directed to a specific improvement to the way computers 

operate.” Enfish, 822 F.3d at 1336. Instead, they are directed at using a computer as 

a tool to solve a problem. Therefore, the asserted claims are directed at an abstract 

idea. 

 The language of the claims at issue confirm that the invention uses a computer 

as a tool and is not directed at improving computer functionality. For example, in 

claim one of the ‘057 patent, which is asserted here, the patent provides that the 

claimed method uses “a computer system” to, among other things, “divid[e] one or 

more configuration queries into multiple configuration sub-queries” and “generat[e] 

a response to one more configuration queries based upon the processing of each subquery.” (ECF #462-4 at Pg. ID 388388.) This claim does not appear to solve a 
28 

problem with computer functionality; instead, it appears to use computer 

functionality to solve a problem more quickly. The claim is therefore directed at an 

abstract idea at step one of the Alice inquiry. 

 Claim one stands in sharp contrast to claim eleven of the ‘057 patent, which 

is not asserted here. That claim specifically references “dividing the configuration 

model so that complexity of each configuration sub-model allows processing using 

available data processing capabilities of the computer assisted configuration 

technology while still representing the relationships included in the consolidated 

configuration models.” (ECF #462-4 at Pg. ID 38388; emphasis added.) Likewise, 

claim twenty-six of the ‘057 patent references “dividing the configuration model so 

that complexity of each configuration sub-model allows processing using available 

data processing capabilities of the computer system while still representing the 

relationships included in the consolidated configuration model.” (Id. at Pg. ID 

38889; emphasis added.) Thus, these non-asserted claims appear to be “directed to 

a specific improvement in computer functionality” rather than “adding conventional 

computer components to well-known [] practices” or “recit[ing] generalized steps to 

be performed on a computer using conventional computer activity.” Enfish, 822 F.3d 

at 1338. The contrast between these non-asserted claims and the asserted claims 

underscores that the asserted claims are not directed at improving computer 

functionality. 
29 

 Moreover, the Court agrees with the Special Master that the asserted claims 

are directed at an abstract idea because “[a]ll of [the claim’s] steps can be performed 

in the human mind, or by a human using a pen and paper.” Cybersource Corp. v. 

Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011) (“[A] method that can 

be performed by human thought alone is merely an abstract idea and is not patenteligible under § 101”). Here, the asserted claims of the ‘057 patent apply only to 

“one or more configuration queries.” (ECF #462-4 at Pg. ID 38388.) And there are 

no limitations that require that “one” query to be overly complex. Thus, the Court 

agrees with the Special Master that the asserted claims “present a manageable mental 

problem ... [that] could be performed by a human.” (R&R, ECF #551 at Pg. ID 

42237.) 

This is the same result that the Federal Circuit reached in Planet Bingo, LLC 

v. VKGS, LLC, 576 F. App’x 1005 (Fed. Cir. 2014). In Planet Bingo, the plaintiff 

alleged that the defendant infringed certain patent claims related to “computer-aided 

methods and systems for managing the game of bingo.” Id. at 1006. At step one of 

the Alice inquiry, the Federal Circuit concluded that the asserted claims were 

directed at an abstract idea because they “[could] be carried out by a human using 

pen and paper.” Id. at 1007 (internal quotation marks omitted). It further rejected the 

defendant’s argument that the asserted claims were not directed at an abstract idea 

because the invention was “complex” and addressed “thousands, if not millions” of 
30 

combinations in a manner that required the use of a computer. Id. at 1008. That 

court held that “the claimed inventions do not require as much. At most, the claims 

require two sets of Bingo numbers, a player, and a manager.” Id. Likewise here, the 

asserted claims require only “one or more configuration queries” (ECF #462-4 at Pg. 

ID 38388) and are not limited “to the large number context.” (R&R, ECF #551 at 

Pg. ID 42240.) See also Planet Bingo, 576 F. App’x at 1008 (“We need not, and do 

not, address whether a claimed invention requiring many transactions might tip the 

scales of patent eligibility, as the claims fall far short of capturing an invention that 

necessarily handles ‘thousands, if not millions’ of bingo numbers or players”). For 

all of these reasons, the Court concludes that the asserted claims are directed at an 

abstract idea at step one of the Alice inquiry. 

 At step two of the Alice inquiry, the Court also agrees with the Special Master 

that the elements of the asserted claims, both individually and “as an ordered 

combination” do not “‘transform the nature of the claim into a patent-eligible 

application.’” (R&R, ECF #551 at Pg. ID 42240, quoting Alice, 134 S.Ct. at 2355). 

The Court acknowledges that the asserted claims reference computers and computer 

systems. But where, as here, “a patent’s recitation of a computer amounts to a mere 

instruction to implement an abstract idea on a computer, that addition cannot impart 

patent eligibility” at step two of the Alice inquiry. Alice, 134 S.Ct. at 2358 (internal 

citation and punctuation omitted). See also Data Engine Technology, 906 F.3d at 
31 

1012 (“The mere recitation of a generic computer [does not] transform [a] patentineligible abstract idea into a patent-eligible invention”). Indeed, “in order for the 

addition of a machine to impose a meaningful limit on the scope of a claim, it must 

play a significant part in permitting the claimed method to be performed, rather than 

function solely as an obvious mechanism for permitting a solution to be achieved 

more quickly, i.e., through the utilization of a computer for performing calculations.” 

Versata Development Group v. SAP America, Inc., 793 F.3d 1306, 1335 (Fed. Cir. 

2015). In this case, as in Versata Development Group, the asserted “claims do not 

meet this test, and instead function solely as a mechanism for permitting [a solution] 

to be performed more quickly” using a computer as a tool. Id. See also Data Engine 

Technologies, 906 F.3d at 1012 (“For the role of a computer in a computer computerimplemented invention to be deemed meaningful in this context of this analysis, it 

must involve more than performance of well-understood, routine, and conventional 

activities previously known to the industry”) (internal punctuation omitted). Thus, 

as explained above, and as explained by the Special Master, the Court concludes that 

the elements of the asserted claims simply do not “supply an inventive concept that 

renders any of them significantly more than an abstract idea.” (R&R, ECF #551 at 

Pg. ID 42240-43.) 

 
32 

 For the reasons explained above, and for all of the reasons offered by the 

Special Master, the Court OVERRULES Versata’s objections and GRANTS Ford 

summary judgment on its claim of invalidity of the asserted claims of the ‘057 

patent.8

 

IV 

 For all of the reasons stated in this Opinion and Order, the Court SUSTAINS 

IN PART AND OVERRULES IN PART Versata’s Objections to the R&R; 

ADOPTS IN PART the recommended disposition of the R&R; and GRANTS IN 

PART AND DENIES IN PART the parties’ pending summary judgment motions 

as follows: 

                                                            

8

 In the R&R, the Special Master framed his analysis around claim one of the ‘057 

patent. However, he further determined that his analysis with respect to claim one 

“applie[d] equally to all of the claims at issue” because each of those claims, like 

claim one, took “the concept of dividing larger problems into smaller ones and apply 

it to problems in the configuration environment.” (R&R, ECF #551 at Pg. ID 42240.) 

The Special Master also noted that Versata did not “offer any arguments seeking to 

treat some of the claims differently from others.” (Id.) In Versata’s objections to the 

R&R, it argues that the Special Master wrongly “purported to invalidate all eight 

asserted claims of the ’057 patent based on a superficial and improper reading of just 

one claim, stopping his analysis after Claim 1 and totally ignoring the other seven 

claims.” (Versata Reply Br., ECF #597 at Pg. ID 46582.) But just as Versata did in 

its summary judgment motion papers, Versata has not explained in its objections 

why the asserted claims should be treated differently from one another. Therefore, 

Versata has not shown the Special Master erred when he concluded that his analysis 

for claim one applies to all of the asserted claims. And, even if the Special Master 

erred in that regard, Versata has not shown why that error warrants relief from the 

recommendation made in the R&R. 
33 

 Ford’s motion for summary judgment of invalidity of the 

asserted claims of U.S. Patent No. 7,200,582 and U.S. Patent 

No. 7,646,064 for violation of the onsale bar is DENIED; 

 The motions of Ford and Versata as to the infringement or 

noninfringement of the ‘582 and ‘064 patents, and also as to 

the novelty and obviousness of the asserted claims of these 

patents, are DENIED; 

 Ford’s motion for summary judgment of noninfringement of 

U.S. Patent No. 7,739,080 is DENIED; 

 Ford’s motion for summary judgment of noninfringement of 

U.S. Patent No. 6,405,308 and U.S. Patent No. 6,675,294 is 

DENIED; 

 Ford’s motion that the asserted claims of U.S. Patent No. 

7,882,057 are invalid as being directed to patent-ineligible 

subject matter under Section 101 is GRANTED; Versata’s 

cross-motion for patent eligibility of the ‘057 patent is 

DENIED; 

 Versata’s motion that the asserted claims of U.S. Patent No. 

7,739,080 are not invalid under Sections 102 and 103 is 

GRANTED. Ford’s declaratory judgment claims asserting 

invalidity of U.S. Patent No. 5,825,651 and U.S. Patent No. 

8,805,825 ARE DISMISSED for lack of subject-matter 

jurisdiction. Versata’s motion that the dismissed or nonasserted claims of the ‘308, ‘294, ‘582, ‘064, ‘057, and ‘080 

patents are not invalid under Sections 102 and 103 is 

DENIED; 

 Versata’s motion that its asserted patents are valid under 

Section 101 as being directed to patentable subject matter is 

WITHDRAWN except as applied to the ‘057 patent, referred 

to above; and 
34 

 Versata’s motion that the asserted claims of the ‘057 patent 

are valid under Sections 102 and 103 in view of the prior art 

is WITHDRAWN. 

IT IS SO ORDERED. 

 s/Matthew F. Leitman 

 MATTHEW F. LEITMAN 

 UNITED STATES DISTRICT JUDGE 

Dated: March 27, 2019 

 I hereby certify that a copy of the foregoing document was served upon the 

parties and/or counsel of record on March 27, 2019, by electronic means and/or 

ordinary mail. 

 s/Holly A. Monda 

 Case Manager 

 (810) 341-9764