Oyster Optics, LLC v. Alcatel-Lucent USA, Inc.

Case: 19-1255 Document: 77-2 Page: 1 Filed: 05/08/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
OYSTER OPTICS, LLC,
Plaintiff-Appellant
v.
ALCATEL-LUCENT USA, INC., CISCO SYSTEMS,
INC.,
Defendants-Appellees
______________________
2019-1255, 2019-1257
______________________
Appeals from the United States District Court for the
Eastern District of Texas in Nos. 2:16-cv-01297-JRG, 2:16-
cv-01301-JRG, 2:16-cv-01302-JRG, Judge J. Rodney Gil-
strap.
______________________
SEALED OPINION ISSUED: May 8, 2020
PUBLIC OPINION ISSUED: May 27, 2020 *
______________________
REZA MIRZAIE, Russ August & Kabat, Los Angeles, CA,
argued for plaintiff-appellant. Also represented by MARC
AARON FENSTER, BAHRAD A. SOKHANSANJ.
* This opinion was originally filed under seal and has
been unsealed in full.
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2 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
MATTHEW S. STEVENS, Alston & Bird LLP, Charlotte,
NC, argued for defendant-appellee Alcatel-Lucent USA,
Inc. Also represented by KIRK T. BRADLEY, STEPHEN
LAREAU, CHRISTOPHER CHARLES ZIEGLER; JOHN D. HAYNES,
Atlanta, GA.
JOHN C. O'QUINN, Kirkland & Ellis LLP, Washington,
DC, argued for defendant-appellee Cisco Systems, Inc.
Also represented by JASON M. WILCOX; MATTHEW
CHRISTOPHER GAUDET, L. NORWOOD JAMESON, Duane Mor-
ris LLP, Atlanta, GA; JOHN MATTHEW BAIRD, Washington,
DC.
______________________
Before LOURIE, SCHALL, and CHEN, Circuit Judges.
SCHALL, Circuit Judge.
Oyster Optics, LLC (“Oyster”) is the owner of U.S. Pa-
tent No. 7,620,327 (“the ’327 patent”). The ’327 patent is
directed to transceiver cards for sending and receiving data
over a fiber optic network. In November of 2016, Oyster
sued various fiber optic equipment manufacturers in the
United States District Court for the Eastern District of
Texas for infringement of the ’327 patent. Among the de-
fendants were Alcatel-Lucent USA, Inc. (“ALU”) and Cisco
Systems, Inc. (“Cisco”). 1 On September 4, 2018, addressing
the parties’ cross-motions for summary judgment, the dis-
trict court granted partial summary judgment in favor of
ALU and Cisco. The court did so because it found that a
settlement agreement between Oyster and Fujitsu Limited
(“Fujitsu”) and Fujitsu Network Communications, Inc.
(“FNC”) (“the Oyster/Fujitsu Agreement” or “the Agree-
ment”) had the effect of releasing ALU and Cisco from
1 Where appropriate, we refer to ALU and Cisco col-
lectively as “Appellees.”
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OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC. 3
liability for infringement of the ’327 patent. See Order
Granting Defs.’ Mot. for Partial Summ. J. Regarding Their
Release Defense, Oyster Optics, LLC. v. Coriant (USA) Inc.,
No. 2:16-cv-01302 (E.D. Tex. Dec. 4, 2018), ECF No. 864
(redacted), J.A. 33–50 (“Summary Judgment Decision”). 2
For the reasons stated below, we affirm.
BACKGROUND
I.
In November of 2016, Oyster sued FNC for infringe-
ment of the ’327 patent. In its suit, Oyster alleged that
FNC infringed the patent by “making, selling, using, offer-
ing for sale, and/or causing to be used” versions of Fujitsu’s
100G/400G LN Modulator and 100G/400G Integrated Co-
herent Receiver, among other products. Summary Judg-
ment Decision at 12–15. 3 Separately, Oyster also sued
ALU and Cisco for infringement of the ’327 patent. Oys-
ter’s suits against ALU and Cisco were based upon their
sales of various products, at least some of which contained
Fujitsu modulators and receivers. See id. at 5. Subse-
quently, Oyster’s suits against ALU and Cisco were consol-
idated with its suit against FNC. Id. at 1. 4
2 The district court subsequently issued an order
clarifying the scope of the Summary Judgment Decision.
Order, Oyster Optics, LLC. v. Coriant (USA) Inc., No. 2:16-
cv-01302 (E.D. Tex. Nov. 7, 2018), ECF No. 850, J.A. 26–28
(“November 7th Order”). The November 7th Order also
granted a joint motion to sever any claims not resolved by
the Summary Judgment Decision into two new actions, one
case for Oyster’s remaining claims against ALU and an-
other for Oyster’s remaining claims against Cisco. Id.
3 We refer to these accused items as “Fujitsu modu-
lators and receivers.”
4 The ALU, Cisco, and FNC litigations were member
case Nos. 2:16-cv-01297-JRG, 2:16-cv-01301-JRG, and
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4 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
Claim 25 of the ’327 patent, which the parties agree is
illustrative, recites:
A transceiver card for a telecommunications box for
transmitting data over a first optical fiber and re-
ceiving data over a second optical fiber, the card
comprising:
a transmitter for transmitting data over the first
optical fiber, the transmitter having a laser, a mod-
ulator and a controller receiving input data and
controlling the modulator as a function of the input
data, the transmitter transmitting optical signals
for telecommunication as a function of the input
data;
a fiber output optically connected to the laser for
connecting the first optical fiber to the card;
a fiber input for connecting the second optical fiber
to the card;
a receiver optically connected to the fiber input for
receiving data from the second optical fiber; and
an energy level detector to measure an energy level
of the optical signals, the energy level detector in-
cluding a threshold indicating a drop in amplitude
of a phase-modulated signal.
’327 patent col. 8 ll. 6–24.
In May of 2018, Oyster settled its suit against FNC by
entering into the Oyster/Fujitsu Agreement. Summary
Judgment Decision at 1–2. To the extent relevant to this
appeal, in Section 3.1 of the Agreement Oyster releases
2:16-cv-01299-JRG, respectively. These member cases
were consolidated into lead case No. 2:16-cv-01302-JRG, a
suit Oyster originally filed against Coriant (USA) Inc. (“Co-
riant”). Coriant is not a party to this appeal.
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OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC. 5
“FNC, Fujitsu, and their Affiliates” from “any and all
claims of infringement under any patent right within the
Licensed Patents, on account of any product, process, or
service exported or imported, made, had been made, used,
distributed, offered to sell, sold, or otherwise disposed of by
FNC, Fujitsu, and their Affiliates.” Id. at 3–4. Section 3.1
further states that Oyster’s release extends to “all custom-
ers . . . of FNC, [Fujitsu], and their Affiliates, but only to
the extent such customers . . . exported or imported, made,
have had made, used, distributed, offered to sell, sold, or
otherwise disposed of Licensed Products or components of
Licensed Products.” Id. at 4. In Section 4.1 of the Agree-
ment, Oyster grants to “FNC, Fujitsu, and their Affiliates”
a forward-looking license under the “Licensed Patents”
with respect to “Licensed Products.” Id. The terms “Affil-
iate,” “Licensed Patents,” and “Licensed Products” are de-
fined in Sections 1.1, 1.2, and 1.3 of the Agreement,
respectively. Id. at 2–3.
Section 1.3 of the Agreement states that “Licensed
Products” means “any products, product lines, services, de-
vices, systems, components, hardware, software and/or
software algorithm and/or combination of any one or more
of the foregoing, made, sold, imported, or distributed by or
for FNC, [Fujitsu], or their Affiliates at any time, including
those sold to, distributed to, or otherwise provided (directly
or indirectly) to any customer by FNC, [Fujitsu], or their
Affiliates.” Id. at 3. The “Licensed Products” definition
contains two additional provisions. They are as follows:
For clarity, this definition of Licensed Products
does not prevent Oyster from exercising its patent
rights in instances where its infringement allega-
tions do not include or refer to a Licensed Product.
For further clarity, this definition of Licensed Prod-
ucts also does not prevent Oyster from exercising
its patent rights in instances where its infringe-
ment allegations do include or refer to a Licensed
Product, unless the only reasonable and intended
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use of the component comprising the Licensed
Product is to practice the claim and the component
substantially embodies the patented invention by
embodying its essential features.
Id.
II.
A.
In the wake of the Oyster/Fujitsu Agreement, ALU and
Cisco moved for partial summary judgment in Oyster’s suit
against them. ALU and Cisco argued that the Agreement
released them from all claims of infringement with respect
to their products containing Fujitsu modulators and receiv-
ers that arose prior to May 22, 2018, the effective date of
the Agreement. Defs.’ Mot. for Partial Summ. J. Regarding
Their Release Defense, Oyster Optics, LLC. v. Coriant
(USA) Inc., No. 2:16-cv-01302 (E.D. Tex. July 24, 2018),
ECF No. 691 at 5–8 (redacted) (“Defendants’ Summary
Judgment Motion on Release”). Oyster cross-moved, argu-
ing that ALU and Cisco’s defenses of exhaustion, license,
and release failed as a matter of law. Mot. for Summ. J. on
Alcatel’s “New Defenses,” Oyster Optics, LLC. v. Coriant
(USA) Inc., No. 2:16-cv-01302 (E.D. Tex. July 24, 2018),
ECF No. 693 (redacted); Mot. for Summ. J. on Cisco’s “New
Defenses,” Oyster Optics, LLC. v. Coriant (USA) Inc., No.
2:16-cv-01302 (E.D. Tex. July 25, 2018), ECF No. 695 (re-
dacted).
For purposes of their cross-motions, the parties agreed
that the following facts were undisputed: (1) The term “Li-
censed Patents” in the Agreement includes the ’327 patent.
(2) Fujitsu Optical Components (“Fujitsu Optical”) is an
“Affiliate,” as defined in the Agreement, of Fujitsu.
(3) ALU and Cisco each acquired Fujitsu modulators and
receivers directly or indirectly from Fujitsu Optical. Thus,
ALU and Cisco are customers of Fujitsu in accordance with
the release provision of the Agreement. (4) The Fujitsu
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modulators and receivers are “products,” “devices,” “com-
ponents,” and/or “hardware . . . made, sold, imported, or
distributed by or for FNC, [Fujitsu], or their Affiliates . . . .”
Summary Judgment Decision at 4–5.
The district court heard oral argument on the parties’
summary judgment motions on August 9, 2018. At the con-
clusion of the hearing, the court stated that, because the
parties agreed the Oyster-Fujitsu Agreement was unam-
biguous, the court was construing the contract “pursuant
to its four corners.” Tr. of Pre-Trial Hearing, Oyster Optics
v. Coriant (USA) Inc., No. 2:16-cv-01302 (Aug. 9, 2018),
ECF No. 824 at 14, 15, 70 (“Pre-Trial Hearing Transcript”).
The court also stated that, based upon two alternate ap-
proaches, it was holding that, under the Oyster/Fujitsu
Agreement, ALU and Cisco were released from Oyster’s
claims of infringement “as to the Fujitsu and its affiliates’
products.” Id. at 72. The court informed the parties that
it would issue a written opinion explaining its holdings. Id.
at 70, 71.
On September 4, 2018, the district court issued the
Summary Judgment Decision. The court began its analysis
by holding that the release of Section 3.1 applies to Fujitsu,
Fujitsu Affiliates, including Fujitsu Optical, and customers
of Fujitsu and its affiliates, where the customers have “ex-
ported or imported, made, have had made, used, distrib-
uted, offered to sell, sold, or otherwise disposed of Licensed
Products or components of Licensed Products.” Summary
Judgment Decision at 8. The district court stated, “[i]t is
undisputed that [ALU and Cisco] are customers of Fujitsu’s
affiliate Fujitsu Optical.” Id.
The district court then turned to the question of
whether, as customers of Fujitsu Optical, ALU and Cisco
were released from liability for infringement by Section 3.1
of the Oyster/Fujitsu Agreement. Id. In its motions for
summary judgment, Oyster argued that ALU’s and Cisco’s
products were not released from infringement by the
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8 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
Agreement because, on their own individually, the Fujitsu
modulators and receivers contained in the accused prod-
ucts could not satisfy essential claimed features of the ’327
patent and thus did not “substantially embod[y]” the pa-
tent claims. Therefore, Oyster maintained, it could exer-
cise its patent rights under the “[f]or further clarity”
provision of Section 1.3. Id. at 10; see also Appellant’s Br.
13–14. In Defendants’ Summary Judgment Motion on Re-
lease, ALU and Cisco argued that Section 3.1 of the Oys-
ter/Fujitsu Agreement released them from liability for
infringement of the ’327 patent for those products that con-
tained Fujitsu modulators and receivers that ALU and
Cisco purchased from a Fujitsu Affiliate. ALU and Cisco
contended that the “[f]or further clarity” provision did not
change the scope of the definition of “Licensed Products”
set forth in Section 1.3 of the Agreement. Appellees’ Br.
13; see generally Defendants’ Summary Judgment Motion
on Release. In separate motions, they also argued that Oys-
ter’s patent rights with respect to the accused products un-
der the ’327 patent were exhausted as a result of Fujitsu
Optical’s authorized sales of the modulators and receivers
to ALU and Cisco. Appellees’ Br. 13.
As to whether the “[f]or further clarity” provision of
Section 1.3 limited the definition of “Licensed Products” in
Section 3.1, the district court held that the clause only ap-
plies to the Agreement’s license provision in Section 4.1,
where the term “Licensed Products” appears, and not to the
customer release provision in Section 3.1, where the term
also appears. Summary Judgment Decision at 9–10. Re-
ferring to the “[f]or further clarity” provision, the court
stated: “[I]t means that the law of patent exhaustion is
acknowledged by the Parties [to the Agreement] to apply to
the Licensed Products identified within the [Agreement].
The provision is a prospective preservation[] of rights under
the forward-looking license of Section 4.1 alone, but it has
no effect as to the retrospective release of Section [3.1].” Id.
at 9 (bracketed revisions added).
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Concluding, the district court found that the Fujitsu
modulators and receivers contained in ALU’s and Cisco’s
products qualified as “Licensed Products” within the mean-
ing of Section 1.3 for three reasons. First, the modulators
and receivers were at least either “products,” “devices,”
“components,” and/or “hardware.” Second, the modulators
and receivers were “made, sold, imported, or distributed”
by an Affiliate (Fujitsu Optical). And, third, the modula-
tors and receivers were “sold to, distributed to, or otherwise
provided (directly or indirectly) to any customer by FNC,
Fujitsu Limited, or their Affiliates.” Id. at 10. The court
thus held that the Fujitsu modulators and receivers quali-
fied as “Licensed Products” within the meaning of Section
1.3 of the Agreement. Id. at 10–11. Having determined
that the Fujitsu modulators and receivers were “Licensed
Products,” the district court ruled, “all of Oyster’s claims
based upon the Licensed Patents against any accused prod-
uct containing a Licensed Product or components of Li-
censed Products have been released under the
[Oyster/Fujitsu Agreement], specifically including accused
products sold prior to May 22, 2018, that include a Fujitsu
[modulator] or [r]eceiver.” Id. at 11–12. Accordingly, the
court held that ALU and Cisco were released from Oyster’s
claims for infringement of the ’327 patent for those prod-
ucts containing Fujitsu modulators and receivers that were
sold prior to the May 22, 2018 effective date of the Agree-
ment.
B.
In the second part of its summary judgment decision,
the district court concluded that there was an alternative
ground for concluding that the Oyster/Fujitsu Agreement
released ALU and Cisco from liability under the ’327 pa-
tent. Id. at 12. The court determined that, to the extent
its holding with respect to the “[f]or further clarity” provi-
sion of Section 1.3 was held on appeal to be incorrect, ALU
and Cisco still would be released from liability. Specifi-
cally, the court found that, in light of Oyster’s contentions
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and representations “in the prior Fujitsu litigation,” the
Fujitsu products identified in that litigation “embody the
essential features of the patented invention,” as required
by the “[f]or further clarity” provision of Section 1.3. Sum-
mary Judgment Decision at 12–17. 5 “Therefore,” the court
stated, “in the event that the ‘for further clarity’ provision
in Section 1.3 of the [Oyster/Fujitsu Agreement] limits the
definition of Licensed Products, the Court holds that Sec-
tion 3.1’s release still applies to the Defendants as to any
claim of infringement relating to the ’327 Patent where the
accused products contain one of the Accused Instrumental-
ities of the Fujitsu litigation.” Id. at 17.
The parties sought clarification of what products were
encompassed by the Summary Judgment Decision. Oyster
interpreted “Accused Instrumentalities of the Fujitsu liti-
gation” to mean only those specific model numbers named
in infringement contentions referenced in the Summary
Judgment Decision. In other words, according to Oyster,
under the court’s alternative ruling, in order to be covered
by the release of Section 1.3 as a “Licensed Product” a Fu-
jitsu modulator or receiver contained in an accused ALU or
Cisco product had to have the same model number as a
modulator or receiver listed in the infringement conten-
tions Oyster served on FNC in case No. 2:16-cv-01299-JRG.
For their part, ALU and Cisco interpreted the phrase to
include the “category” of Fujitsu products named in the in-
fringement contentions, “‘i.e., 100G/400G LN Modulator’
5 In referring to the “prior Fujitsu litigation,” the
court appears to have been referencing both case No. 2:16-
cv-01299-JRG and a subsequent short-lived suit Oyster
filed against FNC, Fujitsu, and Fujitsu Optical, case No.
2:18-cv-0153-JRG. Oyster stipulated to the dismissal of
the latter nine days after filing its complaint. We adopt the
same convention, referring to both actions collectively as
the “prior Fujitsu litigation.”
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and ‘100G/400G Integrated Coherent Receiver’ products.”
Further, ALU and Cisco urged that the model numbers
were “exemplary.” In its November 7th Order, the court
held that ALU and Cisco’s interpretation of the relevant
part of the Summary Judgment Decision was correct. No-
vember 7th Order at 2.
Following the entry of judgment, Oyster timely ap-
pealed. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(1).
DISCUSSION
I.
We review a grant of summary judgment in accordance
with the law of the regional circuit. Profectus Tech. LLC v.
Huawei Techs. Co., 823 F.3d 1375, 1379 (Fed. Cir. 2016).
The Fifth Circuit reviews a grant of summary judgment de
novo. Kinsale Ins. v. Georgia-Pacific, L.L.C., 795 F.3d 452,
454 (5th Cir. 2015). Summary judgment is appropriate
when “there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(a). “By its very terms, this standard pro-
vides that the mere existence of some alleged factual dis-
pute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the re-
quirement is that there be no genuine issue of material
fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–
48 (1986). A dispute is genuine only “if the evidence is such
that a reasonable jury could return a verdict for the non-
moving party.” Id. at 248.
We also review the interpretation of contract terms un-
der regional circuit law. DePuy Spine, Inc. v. Medtronic
Sofamor Danek, Inc., 469 F.3d 1005, 1013 (Fed. Cir. 2006).
The Fifth Circuit reviews a district court’s interpretation
of a contract de novo. Dallas/Fort Worth Int’l Airport Bd.
v. INet Airport Sys., Inc., 819 F.3d 245, 248 (5th Cir. 2016)
(“The contract in this case is governed by Texas law, under
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12 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
which contract interpretation and whether a contract is
ambiguous are questions of law.”). Under Texas law, the
intent of the parties is to be determined from the agree-
ment itself, not from a party’s later interpretation of it. See
Las Colinas Obstetrics-Gynecology-Infertility Ass’n P.A. v.
Villalba, 324 S.W.3d 634, 639–40 (Tex. App. 2010).
II.
Oyster makes three main arguments on appeal. First,
it contends that the district court erred when it construed
the “[f]or further clarity” provision to not apply to the re-
lease of Section 3.1. Appellant’s Br. 20–38. Second, even
if the “[f]or further clarity” provision does not apply to Sec-
tion 3.1, Oyster urges, the plain language of that Section
does not provide a release for a customer to buy Fujitsu’s
components and then incorporate them into an infringing
product. Id. at 38–40; Reply Br. 4–11. Third, Oyster con-
tends that the district court’s alternative ruling is incorrect
because the Fujitsu modulators and receivers do not “sub-
stantially embody” the claims of the ’327 patent. This is so,
Oyster alleges, because the claims of the ’327 patent are
directed to a transceiver card and require components in
addition to a modulator and a receiver. Appellant’s Br. at
42–46. In the Fujitsu litigation, Oyster argues, Oyster con-
sistently accused only Fujitsu’s transceiver card and mod-
ule of direct infringement, not the Fujitsu modulators and
receivers, which Oyster states it accused only of indirect
infringement. Id. at 46–54. Oyster further argues that the
court’s alternative ruling is incorrect because Oyster’s
statements in the prior Fujitsu litigation pertained only to
specific models of Fujitsu modulators and receivers and
“many of ALU’s and Cisco’s products [currently] accused of
infringement utilize Fujitsu modulators and/or receivers
with model numbers that do not appear in the lists in Oys-
ter’s contentions [in the prior Fujitsu litigation].” Id. at 54–
57. In addition, Oyster contends the district court errone-
ously construed Oyster’s statements from the prior Fujitsu
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OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC. 13
litigation to be legally binding judicial admissions. Id. at
50–54.
In response, Appellees argue that the district court
properly found that the“[f]or further clarity” provision of
Section 1.3 does not limit the scope of the term “Licensed
Products.” Rather, it serves to acknowledge the law of pa-
tent exhaustion and clarifies that Fujitsu’s customers have
not been awarded a prospective license. Appellees’ Br. 22–
23, 34–40. Appellees contend that Oyster waived its second
argument by not raising it before the district court. Even
if we were to consider the argument, Appellees argue, the
language of Section 3.1’s release applies to “any and all
claims of infringement under any patent right” and thus
encompasses Appellees’ use of Fujitsu components in their
products. Appellees’ Br. 43–45.
Appellees also urge us to affirm the district court’s al-
ternative ruling. Appellees assert that “[u]ndisputed evi-
dence—Oyster’s contentions, pleadings, and expert reports
in the Fujitsu litigation—shows that the Fujitsu compo-
nents in Cisco’s and ALU’s products substantially embody
the ’327 patent’s claimed invention under the [Agree-
ment].” Appellees’ Br. 26, 45–65. Oyster and its experts
have admitted that the Fujitsu components in this case
perform in materially the same way as the Fujitsu modu-
lators and receivers named in the prior Fujitsu litigation,
Appellees state.
For the reasons that follow, we affirm the decision of
the district court on the basis of its alternative ruling. We
express no view with respect to the court’s primary ruling.
III.
As noted, Section 3.1 of the Oyster/Fujitsu Agreement
provides a release to “all customers . . . of FNC, Fujitsu
Limited, and their Affiliates,” with respect to “Licensed
Products or components of Licensed Products.” Section 1.3
of the Agreement defines “Licensed Products” broadly.
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14 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
Then, in the “[f]or further clarity” provision, it states that,
when the “only reasonable and intended use of the compo-
nent comprising the Licensed Product is to practice the
claim and the component substantially embodies the pa-
tented invention by embodying its essential features,” Oys-
ter is “prevent[ed] from exercising its patent rights” under
the Agreement. Summary Judgment Decision at 12–15.
The question presented by the district court’s alternative
ruling is a narrow one. The parties do not dispute that “the
only reasonable and intended use” of the Fujitsu modula-
tors and receivers contained in Appellees’ accused products
is to practice the asserted claims of the ’327 patent. Thus,
the only issue to be decided is whether the Fujitsu modula-
tors and receivers “substantially embod[y] the patented in-
vention by embodying its essential features.”
In addressing this issue at the conclusion of the August
9 hearing, the district court stated:
[T]he claims, positions, assertions, contentions,
and other positions of [Oyster] in this litigation are
such that they would fall within the language of the
“for further clarity” provision, which I think is un-
disputedly lifted from language addressing the con-
cept of patent exhaustion, such that even if it were
a limitation on licensed products, in this case,
[ALU and Cisco] would be within that limitation
based on what [Oyster has] alleged and how [it]
ha[s] pursued the litigation in this case heretofore,
such that they would meet that limitation and
would also be released.
Pre-Trial Hearing Transcript at 71–72. Thus, the district
court reasoned that Oyster’s infringement contentions
served to satisfy ALU’s and Cisco’s burden of establishing
that the Fujitsu modulators and receivers contained in
ALU’s and Cisco’s products substantially embody the pa-
tented invention by embodying its essential features. See
Vanmoor v. Wal-Mart Stores, Inc., 201 F.3d 1363, 1366–67
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OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC. 15
(Fed. Cir. 2000) (holding the plaintiff-patentee’s allega-
tions of infringement satisfied the defendants’ burden to
prove the accused products were infringing for purposes of
the on-sale bar under pre-American Invents Act 35 U.S.C.
§ 102(b)); Evans Cooling Sys., Inc. v. Gen. Motors Corp.,
125 F.3d 1448, 1451 (Fed. Cir. 1997) (same). We think ev-
idence in the record clearly supports the district court’s
conclusion.
In its suit against FNC, Oyster accused the Fujitsu
modulators and receivers of directly infringing the ’327 pa-
tent. This is evident from the following: (1) In case No.
2:16-cv-01299-JRG, Oyster defined “Accused Instrumen-
talities” to include the Fujitsu modulators and receivers in
its infringement contentions and accompanying claim
charts. See, e.g., Summary Judgment Decision at 13 (quot-
ing Oyster’s infringement contentions which state “the Fu-
jitsu 100G/400G LN Modulator . . . is a transceiver card
with a transmitting and receiving interface”). (2) Oyster’s
expert on infringement in case No. 2:16-cv-01299-JRG in-
cluded the Fujitsu modulators and receivers in his defini-
tion of “Accused Products” that he analyzed for
infringement. (3) In the short-lived complaint filed in case
No. 2:18-cv-0153-JRG, Oyster defined “Accused Instru-
mentalities” to include the Fujitsu modulators and receiv-
ers. (4) Finally, in the present case, Oyster’s expert on
exhaustion confirmed that Oyster’s infringement conten-
tions in case No. 2:16-cv-01299-JRG and its complaint in
case No. 2:16-cv-01299 accused the Fujitsu modulators and
receivers of directly infringing the ’327 patent. Id. at 15–
16.
We recognize that in Vanmoor and Evans Cooling the
contentions that served to establish the accused products
were infringing for purposes of the on-sale bar were set
forth in the plaintiffs’ complaints. In this case, the evi-
dence to which the district court pointed, except for the con-
tentions in the complaint in case No. 2:18-cv-0153-JRG,
consisted of infringement contentions and expert
Case: 19-1255 Document: 77-2 Page: 16 Filed: 05/08/2020
16 OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC.
testimony, not complaint allegations. That said, in the cir-
cumstances of this case, we do not think it was error for the
district court to rely on this material, especially infringe-
ment contentions, which served to flesh out the infringe-
ment allegations in the prior Fujitsu litigation. 6
In sum, in the face of its repeated and consistent state-
ments alleging infringement of the ’327 patent by the Fu-
jitsu modulators and receivers themselves, Oyster’s
present argument that the modulators and receivers are
merely claim components and do not practice the claim or
substantially embody the invention of the ’327 patent is not
persuasive. In other words, we do not believe the district
court erred when it found, for purposes of the Oyster/Fu-
jitsu Agreement: (i) that the Fujitsu modulators and receiv-
ers at issue embody the essential features of the patented
invention in view of “what [Oyster] alleged and how [it]
. . . pursued the litigation”; and (ii) that the Fujitsu modu-
lators and receivers thus fall under the release of liability
for directly infringing devices. Pre-Trial Hearing
6 Oyster’s argument that its statements made in con-
nection with the prior Fujitsu litigation were made in a dif-
ferent case are unavailing, particularly with respect to the
statements and testimony from case No. 2:16-cv-01299-
JRG, which Oyster originally filed against FNC. As noted,
Oyster’s suits against ALU, Cisco, and FNC were consoli-
dated into case No. 2:16-cv-01302-JRG. After the cases
were consolidated, Oyster filed a motion for leave to amend
its infringement contentions with respect to FNC, to which
it attached its updated contentions defining the Accused
Instrumentalities to include the Fujitsu modulators and re-
ceivers. Pl.’s Mot. for Leave to Amend its P.R. 3–1 Infringe-
ment Contentions with Regard to Fujitsu Network
Communications, Inc., Oyster Optics, LLC. v. Coriant
(USA) Inc., No. 2:16-cv-01302 (E.D. Tex. Dec. 6, 2017), ECF
No. 193 (redacted).
Case: 19-1255 Document: 77-2 Page: 17 Filed: 05/08/2020
OYSTER OPTICS, LLC v. ALCATEL-LUCENT USA, INC. 17
Transcript at 71–72; see High Point SARL v. T-Mobile
USA, Inc., 640 F. App’x 917, 929–30 (Fed. Cir. 2016) (“T-
Mobile persuasively established that, in view of High
Point’s own infringement contentions, the accused [prod-
ucts] substantially embodied every purportedly inventive
element of the claimed inventions.”). Accordingly, we agree
with the district court that the release of Section 3.1 of the
Agreement applies to ALU and Cisco as to “any claim of
infringement relating to the ’327 patent where the accused
products contain one of the Accused Instrumentalities of
the Fujitsu litigation.” See Summary Judgment Decision
at 12–15.
Nor do we find the district court’s ruling in the Novem-
ber 7th Order clarifying the scope of its alternate ground in
the Summary Judgment Decision to be in error. Appellees
provided evidence that Oyster based its infringement alle-
gations in the Fujitsu litigation on compliance with a
standard that encompasses the category of 100G/400G LN
Modulators and 100G/400G Integrated Coherent Receivers
comprising the Fujitsu modulators and receivers contained
in Appellees’ accused products. See Complaint, Oyster Op-
tics, LLC v. Fujitsu Network Comms., Inc., No. 2:16-cv-
01299-JRG (E.D. Tex. Nov. 23, 2016), ECF No. 1 at 3–7,
J.A. 2215–19. Oyster has not rebutted this showing with,
for example, evidence of any differences between the model
numbers recited in the prior Fujitsu litigation and those
model numbers used in Appellees’ products.
CONCLUSION
For the foregoing reasons, we affirm the Summary
Judgment Decision.
AFFIRMED
COSTS
No costs.